Money Market Rates Fall over Liquidity Surplus in Banking System
The liquidity surplus in the banking system dragged short-term benchmark interest rates lower sharply ahead of the treasury bills auction scheduled for Wednesday. Key money market indicators fell sharply in the absence of significant funding pressures, with a slowdown in borrowing activities at the standing lending facility of the Apex Bank.
The financial system funding profile remained robust on Tuesday as N145 billion in bond coupon payments balanced out Central Bank of Nigeria (CBN) FX settlement outflows. Banks borrowing activity remains low in the absence of significant funding pressures in the financial system.
Hence, the Nigerian Interbank Offered Rate (NIBOR) recorded upward movements across most tenors, except for the overnight rate, which declined by 1.32% to 28.18%, Cowry Asset Limited said.
Key money market indicators moved higher overall, although the Open Repo Rate and the Overnight Lending Rate fell sharply by 5.10% and 5.08%, respectively, closing at 26.50% and 26.96%.
The Nigerian Interbank Treasury Bills True Yield (NITTY) rose across all tenors, as strong investor selloffs drove the average yield higher by 0.14%, closing at 21.04%
Robust funding levels kept money market rates anchored near 26.5%, with the overnight policy rate (OPR) easing to 26.50% (-5.10%) and the overnight rate (O/N) settling at 26.96% (-5.09%), AIICO Capital Limited said in a report.
Last week, system liquidity closed in the negative at N103.01 billion from N303.04 billion in the previous week, declining by 133.99% week on week. The open repo rate and overnight rates edged higher by 502 bps to close at 31.60% and 509 bps to close at 32.05%, respectively, on Thursday.
#Money Market Rates Fall over Liquidity Surplus in Banking System $17bn: Nigeria Positions as World Bank’s Largest Portfolio in Africa
