Market Analysts Anticipate N2.4trn Repayments to Boost Liquidity
Money market analysts anticipate that robust primary market repayment of N2.4 trillion will play a pivotal role in strengthening liquidity in the financial system. This anticipated surge in liquidity is primarily driven by inflows from matured Open Market Operations (OMO) and Treasury bills.
The financial system closed with an impressive excess liquidity of ₦5.89 trillion, bolstered by substantial contributions from the expiration of OMO bills and strategic bank placements at the Central Bank’s Standing Deposit Facility.
Reports from several reputable Broadstreet firms reveal that the market experienced an influx of ₦956 billion in OMO repayments, vastly outstripping the ₦236 billion in debit from Treasury bills sales recorded during the week.
Nigerian banks maintain a prudent approach to lending, placing excess funds in the Central Bank’s Standing Deposit Facility corridor to manage their daily funding commitments effectively.
Last week, the Nigerian Interbank Offered Rate (NIBOR) curve showed notable increases. The overnight NIBOR surged by 13 basis points week-on-week to 22.38%, according to insights from Cowry Asset Management Limited.
NIBOR rates rose by 4 basis points for 1-month, 17 basis points for 3-month, and 21 basis points for 6-month periods, signalling a tightening of liquidity and a careful approach to interbank lending.
Despite this significant enhancement in liquidity, the overnight funding rate saw a slight 4-basis-point week-on-week uptick, now standing at 22.21%. In contrast, the Open Buy Back (OBB) rate has remained stable at 22.00%.
Looking ahead to the new week, market expectations are high, with anticipated inflows of N1.69 trillion from maturing OMO bills and an additional N711.16 billion from Treasury bill maturities.
Analysts assert that these impressive inflows are poised to maintain elevated levels of system liquidity and sustain interbank funding rates at their current advantageous levels, ultimately contributing to a more resilient financial environment. CBN to Open Treasury Bills for Subscription as N799bn Mature
