Money Market Rates Decline Further as Liquidity Steadies
Stable liquidity balance in the financial system kept movement of money market rates in check. Banks borrowing from the central bank standing lending facility eased further today as interbank rates were priced lower.
After the Apex Bank lifted suspension on borrowing from the standing lending facility in Sept, the monetary authority also raised its borrowing rate to 31.75% to reflect adjustment to monetary policy.
This caused a drastic adjustment in money pricing, and banks costs of funds are projected to rise due to a similar increase in money market related deposits. On Wednesday, the benchmark short-term interest rates declined further in the absence of significant funding pressure in the money market.
Due to daily movements, interest rates on money market have been adjusting both ways depending on the size and liquidity positions.
Data from the FMDQ platform confirmed that funding rates nosedived further after inflows from FAAC, FGN bonds coupon payment and latest OMO bills maturity bolstered the amount in the financial system.
The financial market liquidity closed at negative N837.3 billion on Friday after banks significant borrowings from the Apex Bank standing lending facility. The Nigerian interbank borrowing rate (NIBOR) rose across all maturities, signaling illiquidity in the banking system, Cowry Asset Limited said in a note.
Also, the Open Repo Rate (OPR) and the Overnight Lending Rate (O/N), also dropped by 1.68% and 1.95%, closing at 24.85% and 25.00%, respectively. Both rates were above 32% last week due to pressures on liquidity.
Looking at the liquidity conditions in the financial market, analysts expected interbank rates to remain stable, barring any major catalyst. #Money Market Rates Decline Further as Liquidity Steadies ECOWAS, ECOBANK Unveil Empowerment Programme for Women Traders
