Interbank Rates Rise as OMO Bills Debit Drags Liquidity
Interbank rates rose as the financial system liquidity was dragged by the settlement of the latest round of OMO bills auction offer, sold to banks and foreign investors.
With the liquidity slowed, money market rates adjusted negatively. The short-term benchmark rates climbed sharply, and analysts think pressure will persist this week. Hence, the Nigerian Interbank Offered Rate (NIBOR) declined across most tenors, except for the overnight rate, which rose by 0.17% to 26.96%.
Data from the FMDQ platform revealed that the open repo increased by 164 basis points to settle at 28.14%. Also, the overnight lending rate surged by 152 basis points to settle at 28.50% in the absence of significant inflows.
Liquidity constrained was primarily driven by OMO auction worth more than N1.8 trillion. The CBN offered ₦600 billion across two long-dated papers, with subscriptions reaching ₦1.877 trillion and allotments totaling ₦1.677 trillion.
Due to funding pressure from the OMO settlement, rates surged to elevated levels of 32.5% – 33%. With no significant inflows expected and potential cash reserves ratio activities by the CBN, rates are likely to remain at their elevated levels, analysts said. #Interbank Rates Rise as OMO Bills Debit Drags Liquidity Naira Rallies as CBN Defends Local Currency with $66m
