Interbank Rates Steady on Robust Banking System Liquidity

Interbank Rates Steady on Robust Banking System Liquidity

Interbank rates remained steady despite a slight moderation in the banking system’s liquidity balance, reflecting the absence of significant pressure in the money market.

The short-term benchmark interest rates hovered around 22% as banks continue to lodge excess cash with the Central Bank of Nigeria (CBN) Standing Deposit Facility (SF) window.

The system liquidity moderated slightly by ₦341.79 billion to ₦6.47 trillion from ₦6.81 trillion reported on Wednesday, AIICO Capital Limited said in a note.

The intermarket liquidity declined despite ₦330.65 billion in coupon inflows and a 49.58% jump in banks’ placements at the CBN window.

In the absence of an OMO bill auction, Deposit Money Banks (DMBs) increased their placements at the CBN’s Standing Deposit Facility window to ₦6.14 trillion from ₦4.11 trillion the previous day.

At the midweek auction, the CBN allotted about N1.46 trillion in treasury bills sales to investors with no matured payments from the investment security.

Hence, the market anticipates a financial system debit for the auction settlement to weaken liquidity conditions on Thursday. Broadstreet analysts expected the CBN to float an OMO bill auction to mop up excess credit in the money market.

Data from the FMDQ platform revealed that the Overnight Rate (OVN) remained unchanged at 22.10%, with the Nigerian Overnight Financial Rate (NOFR) and open repo rate unchanged at 22.00% apiece

“We expect system liquidity levels to moderate in the next session, supported by Nigerian Treasury bills auction settlements and expected OMO sales set for tomorrow”, AIICO Capital Limited said.

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