Money Market Rates Mixed as Banking Deficit Hits N1.7trn
The short-term benchmark interest rates moved in opposite direction in the money market as the banking deficit expanded to N1.7 trillion, affecting total subscriptions made at the Central Bank of Nigeria’s (CBN) auction.
Money market rates stayed elevated in the absence of significant inflows to douse an extended liquidity crunch in the banking system.
At the Treasury bill auction on Wednesday, demand or total subscription reduced strongly compared with previous experience, a development attributed to a huge deficit in the financial system at the time.
Banks reportedly raised more than N1.8 trillion to augment their liquidity position before the CBN N800 billion auction sales were opened for subscription. Interbank or money market rates are expected to climb further on the expectation that liquidity challenges in the banking system will persist.
In a note, TrustBanc Financial Group Limited said the deficit in the banking system expanded by 16.82% to open at N1.7 trillion from N1.433 trillion, extending its negative balance streak to the ninth consecutive day.
The Nigerian Interbank Offered Rate (NIBOR) declined across most tenors, while the overnight NIBOR remained unchanged within the range of 0% to 32.79%, Cowry Asset Limited said.
Data from the FMDQ platform cited by investment banking firm showed that the Open Repo (OPR) rate decreased by 10bps to 32.40%, while the Overnight (O/N) rate increased by 2bps to close at 32.90%.
With a Nigerian Treasury bill auction settlement worth ₦503.92 billion expected on Thursday, analysts said they anticipate further liquidity strain and interbank rates to trend upward. #Money Market Rates Mixed as Banking Deficit Hits N1.7trn Dangote Refinery Stops Selling Petrol in Naira
