Interbank Rates Surge as CBN Moves to Tighten Liquidity
Interbank rates inched higher as the Central Bank of Nigeria (CBN) moved to reduce excess liquidity level in the financial system via its open market operations.
The funding profile was broadly stable but ended slightly lower compared to the previous week, despite inflows from FGN bond coupons and OMO repayments, while funding rates inched up modestly.
System liquidity opened the week at a net surplus of N2.0 trillion, lower than the previous week’s N3.4 trillion. The liquidity profile was supported by N300 billion OMO maturities that helped sustain interbank stability.
However, by week’s close, liquidity further thinned to N1.62 trillion as the CBN intensified liquidity sterilisation through primary market repayments.
Most banks continued to park excess cash at the Standing Deposit Facility (SDF) window, reflecting weak credit appetite and cautious short-term positioning.
With the fluctuations, money market rates trended higher across maturities as the CBN moved to curb excess liquidity. The Nigerian Interbank Borrowing Rate (NIBOR) rose 6 bps week-on-week to 24.92%, investment firm Cowry Asset Limited reported.
Funding pressures also showed up at the policy window, with the repo and overnight lending rates inching up to 24.54% and 25.07%, signalling tightening interbank conditions.
Meanwhile, bullish sentiment dominated the Treasury Bills space, with strong buying interest across short, mid, and long-dated maturities driving average yields 6 bps lower to 17.39% week-on-week.
However, the OMO market traded mixed, with mild selloffs at the mid-to-long end—particularly on the 9-Dec and 17-Feb maturities—pushing average OMO yields 105 bps higher to 21.62%.
Similarly, the Nigerian Interbank Treasury Bills true yield curve showed mild upticks across short and medium tenors as investors demanded higher returns.
Markets anticipate system liquidity to stay in positive territory, bolstered by N378 billion in T-bill maturities and expected inflows from FAAC allocation.
The CBN is also set to conduct a N650 billion primary T-bill auction across the standard maturities. #Interbank Rates Surge as CBN Moves to Tighten Liquidity BUA Foods, Cement Surpass N17trn in Market Value, 18% of NGX
