Money Market Rates Fluctuate as Banks Settle Tax Payments

Money Market Rates Fluctuate as Banks Settle Tax Payments

Money market rates experienced variation due to outflows linked to corporate tax payments by Nigerian deposit money banks, which affected liquidity levels in the financial system. Despite this, the market sustained adequate liquidity, with anticipation of significant inflows from matured instruments in July.

In an update, Erad Partners Limited revealed that there will be N949.727 billion in fixed income cash flow in July across bills and local bonds. Rates have been relatively steady in the absence of significant funding pressures in the banking system.

The interbank market remained well-liquid on Wednesday as the Central Bank of Nigeria (CBN) failed to conduct a treasury bills auction after it opened the week with a N600 million OMO bills offer.

According to AIICO Capital Limited, the money market, however, experienced huge outflows for corporate taxes paid by local banks, but this was unable to shake the financial system, which has been flooded with cash.

As a result, rates were largely stable around 26.5%. The Overnight Policy Rate (OPR) held firm at 26.50%, while the OvovernightO/N) rate edged up byby 4 bpso 27.00%. Analysts at AIICO Capital Limited expect rates to stay around 26.5%, assuming no significant liquidity strain arises.

The Nigerian Interbank Offered Rate (NIBOR) recorded an upward trend across all maturities, reflecting tightening liquidity conditions in the financial system. Cowry Asset Limited reported in a note.

The Nigerian Treasury Bills (NITTY) curve displayed a mixed performance across all maturities, reflecting divergent yield movements in the short- and medium-term segments. Despite this variability, the secondary market maintained a bullish tone, with the average yield declining by 20 basis points to settle at 19.85%. Nigeria’s Eurobond Yield Falls to 8.6% on Bargain Hunting