Interbank Rates Spike as OMO, CRR Debits Shrink Liquidity
The money market saw a sharp increase in interbank rates at the start of the week, reversing a previous trend, as there were no notable inflows to improve the financial system’s liquidity balance.
The funding system turned to about N33 billion deficit from surplus level reported at the week, on account of huge withdrawals, and absence of significant inflows to reduce pressures.
Rates adjusted to market dictates as funding requirements outpaced the balance available in the money market. The financial system experienced strong outflows relating to the Central Bank of Nigeria’s (CBN) cash reserves (CRR) maintenance debits on local deposit money banks.
A huge outflow relating to the settlement of OMO bills auctioned to foreign investors and local deposit money banks in the primary market last week also put additional pressure on funding levels. Hence, the Nigerian Interbank Offered Rate (NIBOR) increased across all maturities, signalling illiquidity within the banking system.
According to information from the FMDQ platform, interbank rates rose, with the Overnight Policy Rate (OPR) increasing by 3.72% to 31.39% and the Overnight Rate (O/N) climbing by 3.83% to 32.00%
In its note, investment experts at AIICO Capital Limited said the week began with a deficit in system liquidity. The lower liquidity balance in the financial system was attributed to the debit of N772.93 billion from the OMO auction settlement and CBN’s CRR operations last Friday.
This liquidity shortfall was further worsened by today’s OMO auction results, where N1.559 trillion was sold, significantly exceeding the N600 billion offered.
Meanwhile, OMO maturities of about N101.8 billion is expected to boost liquidity levels in the financial system on Tuesday. #Interbank Rates Spike as OMO, CRR Debits Shrink Liquidity Import Licence: Dangote Refinery Seeks to Amend Suit Against NNPCL, Others

