Liquidity Crunch: Banking Deficit Hits N1.84trn, Rates High
The liquidity crunch in the financial system expanded due to the Nigerian Treasury bills settlement on Thursday. Hence, the short-term benchmark interest rates remained elevated, trending above 32% apiece on the day in the absence of significant inflows.
Money market rates remained elevated, as the open report rate hovered near 33% despite about N255 billion inflows from FGN bonds coupon payments.
Specifically, market analysts said ahead of March bonds auction sales next week, the banking system received inflows from bond coupon payments worth N254.82 billion. At the same time, the banking system was debited with N503.92 billion, and analysts noted that the outflow put pressures on liquidity on Thursday.
The banking system closed in deficit or a net short position of N1.84 trillion, Cordros Capital Limited and TrustBanc Financial Group Limited revealed in their separate updates. The Nigerian Interbank Offered Rate (NIBOR) increased across most tenors, except for the overnight NIBOR, which declined by 0.07% to 32.71%, Cowry Asset Limited said in a note.
Data from the FMDQ platform cited by the investment banking firm revealed that interbank funding rates held steady, with the Open Repo (OPR) and Overnight (O/N) rates unchanged at 32.40% and 32.90%, respectively.
“With no significant inflows on the horizon, the liquidity squeeze is likely to persist, keeping interbank rates elevated above 30%,” TrustBanc said in its market update.
With current liquidity levels and no significant inflows expected, market analysts said they anticipate rates will remain elevated as the week about to close. #Liquidity Crunch: Banking Deficit Hits N1.84trn, Rates High US Recession Looms for First Half of 2025 – CEO
