Money Market Rates Fall as Liquidity Level Rises
The short-term benchmark interest rates in the money market declines due to improved liquidity in the financial system on Wednesday.
Investment banking firms reported that opening system liquidity increased due to Federal Account Allocation Committee (FAAC) credit inflows that hit the space.
Analysts had predicted that short term benchmark interest rates would slide below 30% this week on expected inflows into the system.
Analysts also noted that Treasury bills auction conducted on Wednesday prompted banks to raise fund from the Central Bank of Nigeria’s standing lending facility.
This elevate the balance in the financial system, reducing pressures from outflows and stopping market rates to climb further.
The open repo rate (OPR) to decrease by 764 bps to 26.05%, while the overnight lending rate decreased by 776 bps to 26.60%, according to data from the FMDQ securities exchange platform.
The rates decline was driven by improved system liquidity, supported by Remita inflows coupled with FAAC disbursements, which offset outflows from the FGN bond auction settlement, according to CardinalStone Partners Limited.
In an email, Cowry Asset Management Limited told investors that local banks experienced excess liquidity following today’s T-bills maturity, which prompted an uptick in the use of the Standing Deposit Facility.
Consequently, Nigerian interbank offered (NIBOR) rates declined across all maturities. The market recorded the net FGN bond settlement worth N127.48 billion. #Money Market Rates Fall as Liquidity Level Rises
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