Money Market Rates Hit 31% as Liquidity Tightens Further
Money market rates crossed 31% due to lingering liquidity in the financial system. Short-term benchmark interest rates have been under pressure due to insufficient balance in the financial system to meet funding requirements of local banks with short cash needs.
After the Central Bank of Nigeria (CBN) lifted suspension on banks from accessing funds from its borrowing window, rates have plunged to 20%.
The rates trend in the market often affects returns on mutual funds, Analysts said. Adding that banks funding needs would always push lenders to borrow from the CBN.
Yesterday, the Nigerian interbank offered a rate, NIBOR, spiked as iqudty pressures tightened further.
Analysts at Cowry Assets Limited said local deposit money banks competing for funds at higher rates.
The situation reflects the strained liquidity conditions in the financial system on the back of low inflows from maturing instrument.
The sustained absence of significant inflows to boost liquidity levels has kept yield uptrend in the money market in the past week.
Data from the FMDQ showed that key money market rates such as the Open Repo Rate (OPR) and Overnight Rate (O/N) surged, closing at 31.10% and 31 60%, respectively.
Similarly, In the Nigerian Interbank Treasury Bs market, yield across the tenor options decreased, with NITTY rates faingby 0.60%, 073%,0.94% and 1.25% for the 1-month, 3-month,6-month and 12-month periods. #Money Market Rates Hit 31% as Liquidity Tightens Further
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