Money Market Funding Pressure Eased on OMO Repayment

Money Market Funding Pressure Eased on OMO Repayment

At the money market, funding pressures eased slightly today, as open market operations (OMO) repayments of ₦92.5 billion hit the system.

Analysts at Chapel Hill Denham said this helped lower the deficit in the financial system to ₦314 billion from ₦384 billion yesterday.

Now, Standing Lending Facility (SLF) borrowing of deposit money banks (DMBs) also dropped to ₦315 billion from ₦384 billion.

Consequently, the Open Buy Back and Overnight rates declined by 480 basis points (bps) and 490 bps to 15.20% and 16.10% respectively.Money Market Funding Pressure Eased on OMO Repayment

In the fixed income market, against the backdrop of the elevated funding rates, the front end of the curve continued to witness bearish sentiments, Chapel Hill said.

Discount rates on OMO bills rose by an average of 31 bps across the benchmark curve to 5.50%.

This was due to selling on short (+33bps to 4.38%) and mid (+61bps to 5.66%) DTMs.

The Nigerian Treasury Bills (NTBs) closed flat across most tenors, but analysts said the benchmark curve compressed by 3 bps to 2.27%.

“The bond market also softened today after weeks of rally”, Chapel Hill Denham said.

Analysts explained that bond yield curve expanded by 5 bps to 7.40% due to duration aversion, which offset sustained gains at the short end of the curve.

Meanwhile, the USD/NGN rate weakened by ₦2 or 0.43% in the parallel market to ₦463, while the naira strengthened by a marginal 25 kobo or 0.06% in the I&E Window to ₦386.50.

The official and secondary market intervention sales (SMIS) rates were unchanged at ₦381 and ₦380.69 respectively. The external reserves stood at US$38.15 billion.

Nigeria’s Balance of Payment Plunged to Deficit in Q1

Money Market Funding Pressure Eased on OMO Repayment by Julius Alagbe.

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