Interbank Rates Shrink as Additional Inflow Boosts Liquidity
The short-term benchmark interest rates declined further on the back of sufficient liquidity level in the financial system. Borrowing from the Central Bank of Nigeria’s (CBN) standing lending facility (SLF) continues to slow down in the new week.
Analysts said the market would continue to price interbank rates higher in the absence of sufficient liquidity level that meet funding requirements. Last month, more than N8 trillion was accessed by banks from the CBN window as a result of tight liquidity in the money market.
This kept interbank rates elevated in the money market, which trended above 32% apiece toward the end of the month. Last week, banks that were in deficit positions again pitched their tents at the borrowing window and accessed N3.6 trillion in a swoop to fund their operations.
Analysts noted that outflows related to OMO bills auctioned worth about N1.45 trillion drained liquidity in the financial system early in November. That singular OMO auction tightened the liquidity balance in the market for the month in the absence of other significant inflows.
On a positive side, most money market deposit accounts reported a surge in returns, investment experts said in a note cited by MarketForces Africa. In the money market, the Nigerian Interbank Offered Rate (NIBOR) exhibited mixed movements across all maturities, Cowry Asset Limited told investors in a note on Tuesday.
Analysts at the firm stated that the overnight NIBOR declined to 27.25%, reflecting adequate liquidity within the banking system. The overnight policy rate (OPR) declined by 62 bps to 26.56% and the overnight rate (O/N) fell by 78 bps to 27.11%, data from the FMDQ platform confirmed.
The banking system liquidity expanded by an additional 39%, opening the day with a robust balance of N629.19 billion, TrustBanc Financial Group said in a note.
Analysts attributed this to additional liquidity in the financial system today, which caused interbank rates to ease further. #Interbank Rates Shrink as Additional Inflow Boosts Liquidity FBN Holdings Sheds 8% as Investors Exit Positions
