Money Market Rates Jump as Banks Heat Up CBN Facility
Interbank rates crossed the 31% benchmark as the liquidity level in the financial system remains in negative territory. Due to a weak funding profile in the financial system, money market rates have remained elevated.
According to data from the FMDQ platform, the open repo rate rose by 82 basis points to 31.28% in the market on Wednesday. Likewise, the overnight lending rate climbed by 56 bps to settle at 31.56% with banks queueing at the Central Bank of Nigeria’s borrowing shop for funding.
Analysts said pressure remained elevated in the money market even with coupon inflows from FGN bonds. The market recorded an inflow of N57.73 billion from FGN bond coupon payments.
After the inflows, the liquidity balance in the financial system closed at N542 billion negative ahead of FAAC credit disbursements. But this was insufficient to upturn the money market rates direction, while analysts noted that fewer deposit money banks were exposed to the Standing Lending Facility window.
Banks with excess cash were also requesting a higher rate to part with their funds. Tier-2 banks were noted to form the majority of the borrowers at the CBN window. “We expect the interbank rates to remain elevated tomorrow, pending FAAC inflows,” AIICO Capital Limited said in its market update.
Nigerian interbank offered rates increased across all tenors, reflecting system illiquidity. Nigerian Interbank Treasury Bills True Yield witnessed mixed movement across all maturities. The average secondary market yield on T-bills moderated by 0.01% to 18.18%. #Money Market Rates Jump as Banks Heat Up CBN Facility FX Stability: CBN Sells 122.671m Dollars to 46 Authorised Dealers
