Money Market Rates Broadly Stable as Excess Liquidity Tops N7trn
Money market rates were broadly stable as excess liquidity in the Nigerian financial system topped N7 trillion, reflecting the Apex Bank’s lack of significant mop-up actions.
Liquidity conditions in the financial system remained robust, with the net surplus balance rising to N7.37 trillion from N6.94 trillion the previous week, investment firm Cowry Asset Limited said in an update.
Open Market Operations (OMO) maturities largely supported the excess funding profile, despite a N71.16 billion settlement for the Nigerian Treasury bills auction conducted midweek.
The sustained liquidity surplus reflects continued cash accumulation within the banking system, as banks maintained substantial excess reserves amid relatively limited funding requirements. Cowry Asset Limited said in the market update.
Analysts said short-term funding conditions remained broadly stable, with the overnight rate edging up marginally by 2bps to 20.36%, while the funding rate held steady at 20.00%.
According to the investment firm Cowry Asset Limited, the marginal movement in funding costs, despite higher system liquidity, suggests that banks’ preference for holding excess cash and placing funds with the Central Bank continued to moderate interbank market activity.
In the interbank market, the Nigerian Interbank Offered Rate (NIBOR) moderated across the one-, three-, and six-month tenors, declining by 23bps, 38bps, and 63bps to 20.49%, 20.71%, and 20.91%, respectively.
The overnight rate remained unchanged at 20.29%, indicating relative stability in immediate funding costs, while the decline in forward rates reflected improved liquidity expectations over the medium term.
At the OMO bills auction the Central Bank conducted last week, it offered N1 trillion across the 124-day and 138-day instruments, attracting subscriptions of N2.28 trillion, a bid-to-cover ratio of 2.28x.
However, total allotments amounted to N244.94 billion, translating to a sales-to-offer ratio of 0.24x. Stop rates cleared at 17.69% and 17.63%, respectively.
The substantial oversubscription, alongside the relatively low allotment, suggests strong investor appetite for high-yielding short-term instruments, although the CBN maintained a selective approach to liquidity absorption. Oyedele Defends Nigeria’s $21.7 Billion Borrowing Proposal
