Money Market Rates Dip as Liquidity Pressures Ease

Money Market Rates Dip as Liquidity Pressures Ease

Money market rates decline as liquidity level in the financial system improved following flood of inflows from maturing debt instruments and FAAC credits.

Total funding has been under pressure in the absence of inflows while debit for primary market auctions have consistently put a strain on funding.

Interbank bank rates had crossed 35%, while local lenders raise fund from the apex bank standing lending facility on constant basis to augment their liquidity requirements.

With interest rate hike, analysts said the new market dynamic would add additional layer to rate pricing in the market – while banks with excess cash are already demanding higher rates to part with their fund.

In the money market yesterday, Nigerian interbank offered rate declined for most tenors, Cowry Asset Limited told investors in an email note, adding that this reflects increased liquidity in the financial system.

The firm said in its noted that the overnight Nigerian interbank offered rate decreased by 505 basis points to 30.08%. Analysts attributed the decline to the OMO and T-bills maturity, along with last week’s shared allocation, which has now permeated the market.

Similarly, key money market rates such as the Open Repo Rate (OPR) and Overnight Lending Rate (OVN) also fell, closing at 26.45% and 27.08%, respectively, down from 34.88% and 35.53% the previous day.

At the close of trading session, the Nigerian Interbank Treasury Bills True Yield rates closed mixed. However, the secondary market for Nigerian Treasury Bills was active and bullish due to rising investor sentiment, resulting in a drop in the average T-bills yield by 1 basis point to 22.52%. #Money Market Rates Dip as Liquidity Pressures Ease

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