Interbank Rates Mixed as OMO Bills Inflow Boosts Liquidity
Interbank rates were mixed as additional inflows from matured OMO bills lifted liquidity levels in the financial system on Tuesday. Money market rates have been in check, tightened on the back of excess liquidity, which reduced banks’ borrowing activities at the Central Bank’s standing lending facility.
The Apex Bank, however, effected some liquidity management options with OMO bills and Treasury bill auctions to reduce the surplus liquidity to a greater degree and set rates in line with monetary policy.
According to market reports reviewed by MarketForces Africa, the liquidity amount in the banking system closed at N1.03 trillion before the holiday, a notable decline from N1.90 trillion recorded the previous week.
The drop reflects the impact of liquidity absorption through the Nigerian Treasury bills auction of N450 billion and the more sizable OMO auction totaling N1.51 trillion last week. The brought forward liquidity balance was boosted on Tuesday as N264 billion in receipts from OMO bills that matured advanced the funding profile.
The excess balance kept money market rates steady around 26.5% despite cash reserve ratio debit posted by the CBN on some banks that failed to meet their lending-to-deposit target set by the regulator.
The Nigerian Interbank Offered Rate (NIBOR) declined across all tenors except for the overnight rate, which remained steady at 28.83%, indicating improved liquidity in the banking system. Specifically, the 1-month, 3-month, and 6-month NIBOR rates dropped by 63 bps, 126 bps, and 193 bps, respectively, according to Cowry Asset Limited.
The short-term benchmark interest rates: the Open Repo Rate (OPR) held steady at 26.50%, while the Overnight Lending Rate (OVN) inched up by 1 bps to 26.95%. #Interbank Rates Mixed as OMO Bills Inflow Boosts Liquidity Nigeria’s Banking Sector Stable, CBN Reassures Nigerians
