Money Market Rates Jump as Auction Squeezes Financial System Liquidity
The short-term benchmark interest rates rose strongly in the money market due to depressed liquidity in the financial system. The liquidity balance in the financial system reduce after the apex bank open market operation.
At the primary market auction, the Central Bank of Nigeria (CBN) sold ₦758.00 billion worth of OMO bills, focusing only on the long-dated paper, despite offering a total of ₦500.00 billion across the three tenors.
Investment banking experts at Futureview Financial Limited said in a note that system liquidity decrease to negative N1.70 trillion from N359.89 billion on Monday after the Central Bank lifted suspension on borrowing from standing lending facility.
According to data from the FMDQ securities exchange platform, the open repo rate (OPR) increased by 253 bps to 27.50%, and the overnight rate (O/N) rose by 85 bps to 26.35% due to tight system liquidity.
The Nigerian interbank offered rates (NIBOR) increased across tenors, reflecting tighter liquidity conditions, Cowry Asset Limited said in its market update.
Analysts said the shift followed the CBN’s efforts aimed at mopping up excess liquidity from the financial system through the OMO auction on Monday. #Money Market Rates Jump as Auction Squeezes Financial System Liquidity
