Money Market Rates Mixed as Banks Borrow from CBN

Money Market Rates Mixed as Banks Borrow from CBN

Money market rates closed on a mixed note as liquidity balance in the financial system moderated due to cash reserve ratio maintenance debits slammed on deposit money banks by the authority ahead of Treasury bill redemption.

The short-term benchmark interest rates continue to track behind 27% in the absence of significant funding pressures in the market. Investment analysts said interbank liquidity opened lower at about ₦341 billion but maintained a positive balance, AIICO Capital Limited said in its market report.

Liquidity level in the financial system reduced following cash reserve maintenance debit on banks by the central bank. Hence, the short-term benchmark interest rates showed no material movement; banks accessed funding totaling ₦274.17 billion from the standing lending facility of the CBN.

TrustBanc Financial Group Limited said in its note that the withdrawal was more than five times the ₦48.50 billion accessed the previous day. The Nigerian Interbank Offered Rate (NIBOR) increased across all tenors, reflecting the conditions in the banking system on Wednesday.

Data from the FMDQ platform confirmed that key money market indicators were mixed: the Open Repo Rate (OPR) fell by 0.40% to 26.50%, while the Overnight Lending Rate rose by 0.42% to 26.96%.

Market players expected Nigerian Treasury bibilledemption of about N127.25 billion to boost liquidity levels in the financial system on Thursday, though rates could rise moderately depending on the NTB auction results and CBN FX settlement.

The Nigerian Interbank Treasury Bills True Yield (NITTY) trended upward across all tenors, while the secondary market for Nigerian Treasury Bills turned bearish. In the meantime, money market rates are mirroring Nigerian monetary policy targets and are performing as expected.

A slew of market analysts anticipate that idle liquidity would decrease, potentially pushing money market rates higher. #Money Market Rates Mixed as Banks Borrow from CBN GTCO Slips Slightly Ahead of Dividend Payment