Money Market: Inter-bank Rates Moderated on Robust Liquidity

Money Market: Inter-bank Rates Moderated on Robust Liquidity

Inter-bank rates moderated further in the money market on Monday on the back of robust liquidity in the financial system.

On Monday, the financial system liquidity was opened at ₦604.5 billion, which market analysts say was partly buoyed by bond coupon payment.

Then, the Open Buy Back (OBB) and Overnight (OVN) rates declined by 48 basis points (bps) and 33 bps to 1.13% and 1.88%, respectively.

Meanwhile, the fixed income market opened the week with largely bullish sentiments, which was also partly aided by the high liquidity in the financial system.Money Market: Inter-bank Rates Moderated on Robust Liquidity

However, short term rates were broadly flat, as the Nigerian Treasury Bill (NTB) benchmark curve was unchanged at 2.07%.

Also, the open market operation (OMO) curve moderated by 7 bps to 4.14%, due to interest in FEB 2021 (-66bps).

In the bond market, yields moderated by 16 bps across benchmark tenors to an average of 6.60%, as short (-2 bps to 3.99%), intermediate (-45 bps to 6.25%) and long term (-5 bps to 8.81%) yields compressed.

Chapel Hill Denham said barring a cash reserve ratio (CRR) debit by the CBN this week, the financial system is expected to remain liquid, which is supportive of sentiments.

Analysts also noted that a rollover NTB auction is scheduled for Wednesday, with the Debt Management Office set to offer ₦269.95 billion across three tenors.

The tenors include ₦49.84 billion of 91-day, ₦54.59 billion of 182-day, and ₦161.52 billion of 364-day papers.

The previous auction cleared at 1.30%, 1.80% and 3.35% respectively, analysts stated.

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Meanwhile, foreign exchange rate weakened by ₦3.00 or 0.6% in the parallel market to ₦475.

Also at the Investors and Exporters Window (IEW); rate appreciated by 0.06% or 25 kobo to ₦389.25.

The official and SMIS rates were unchanged at ₦381 and ₦380.69 respectively, based on data from the FMDQ.

Money Market: Inter-bank Rates Moderated on Robust Liquidity

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