Liquidity: Banks Raise N1.54Trn from CBN to Fund Operations
Some of the Nigerian banks that were liquidity stressed raised N1.28 trillion from the Standing Lending Facility (SLF) of the Central Bank (CBN) to meet funding requirements.
Liquidity levels in the money market plunged following the settlement of the OMO auction conducted by the CBN on Monday. The debits for primary market auction sales have been major drivers of outflows from the system.
Banks have been investing heavily in government borrowing instruments on the back of an elevated yield in the fixed income market. The inflows and outflows relating to these investment securities are often taking through the financial system.
On Tuessay, the financial system liquidity sanked deep into deficit due to about N1.6 trillion in OMO auction settlement. The deficit funding position in the banking system expanded further, opening the day with a negative balance of N1.28 trillion, TrustBanc Financial Group said in an update.
The investment firm noted that the huge deficit was driven by a 319% surge in SLF activity. Banks raised N1.54 trillion in an effort to meet short-term funding obligations, according to analysts’ notes.
The liquidity stress in the system was mitigated by an inflow of N101.8 billion from matured OMO bills. The liquidity shortfall pushed interbank rates higher, with the open repo rate rising by 68 bps to 32.07%, while the overnight rate advanced by 82 bps to close at 32.82%.
“In the near term, we expect liquidity levels to remain depressed, while interbank funding rates remain elevated at current levels,” TrustBanc Financial Group said in its market update. #Liquidity: Banks Raise N1.54Trn from CBN to Fund Operations We Must Embrace Technology to Drive Growth – Tinubu
