Money Market Rates Mixed as OMO, SWAP Inflows Boost Liquidity
Money market rates diverged on the back of movement in liquidity balance in the financial system. The short-term benchmark interest rates mixed after inflows from matured OMO bills and swap inflows lifted the liquidity balance.
At the end of the trading session, liquidity balance still decreased on the day as market participants fulfilled some funding obligations. The market rates have dropped successively due to lower funding demand on a relatively healthy liquidity in the financial system.
Market analysts noted that local deposit money banks were at ease meeting their funding obligations, reversing the huge borrowing trend from the Central Bank of Nigeria’s (CBN) standing lending facility last week.
Big banks were much in stronger financial positions liquidwise despite their sizeable funding demand than local lenders due to huge deposits in their books.
This led to two-way activities at the standing lending facility, where cash-deficit banks borrow and standing deposit banks where cash-rich banks make deposits for their excess liquidity.
Even though liquidity balance decreased, it still maintained a fairly strong position, bolstered slightly by swap and OMO maturities of about N6.38 billion, AIICO Capital Limited said in a note.
Key money market rates were ended the day below 26% apiece in spite of the settlement of FX interventions. The Open Repo (OPR) rate eased by 11bps to close at 25.07%, while the Overnight (O/N) rate edged higher by 10bps to settle at 25.79%.
TrustBanc Financial Group said in its market update obtained by MarketForces Africa that the liquidity in the banking system declined by 27% on the day.
The decline in the funding balance occurred despite the inflow of N6.38 billion from OMO maturities. The financial system was noted to have opened the day with a relatively buoyant balance of N226.51 billion. Naira Plummets to N1690/$ after CBN Priced Spot Rate High
