Money Market Rates Fall Sharply on Robust Liquidity
Funding pressures in the money market declined sharply as significant inflows lifted the banking system deficit to surplus. This reduced banks race to the Central Bank of Nigeria’s (CBN) borrowing window, or the Standing Lending Facility (SLF).
The activities at the SLF window had worsened funding rates in the prior day, coupled with the settlement of N1 trillion in OMO bets placed by investors.
Reversing the previous trend, the short-term benchmark interest rates eased on Tuesday as liquidity balance in the financial system rose 364% on the day. Banking system liquidity reached N201.55 billion, according to TrustBanc Financial Group Limited.
This represents an increase of 364% on the day, from N76.5 billion at the beginning of the week. Hence, Nigerian Interbank Offered Rate (NIBOR) trended downward, reflecting improved liquidity driven by the maturity of Open Market Operations (OMO) bills.
Similarly, key money market indicators softened, with the Open Repo Rate (OPR) and Overnight Lending Rate declining by 4.07% and 4.06%, respectively, to close at 28.00% and 28.58%.
The short-term rates are expected to be impacted marginally as Nigerian Treasury bills auction. # Money Market Rates Fall Sharply on Robust Liquidity US Dollar Rises Ahead Macro data, Inauguration
