Money Market Rates Mixed as System Liquidity Plunges by 60%
The money market rates closed on a mixed note as financial system liquidity plunged by 60% amidst declining bank placements with the Central Bank of Nigeria (CBN).
The sharp liquidity decline followed the settlement for N2.7 trillion OMO bills allotted to foreign portfolio investors and local deposit money banks.
The open market operation of the CBN triggered huge outflow from the money market as the authority sought to achieve manageable funding profile. The money market liquidity tightened, opening the day with a balance of ₦1.66 trillion, down by 60% from the previous day level.
Banks placement at the Standing Deposit Facility (SDF) continue to reduce as the authority’s opened the year with aggressive primary market actions. Banks placement at the CBN window fell 35% to ₦1.76 trillion, according to TrustBanc Financial Group Limited.
Meanwhile, there were activities at the CBN standing lending facility (SLF), where some market participants accessed ₦235.00 billion to patch their respective liquidity requirements, AIICO Capital Limited reported.
Meanwhile, the CBN conducted Treasury bills auction, offering ₦1.15 trillion to investors for subscription. The Apex Bank allotted to match. The auction result showed that a total of ₦1.15 trillion across 91-, 182- and 364-day tenors was allotted to investors at higher spot rates.
Consequently, average funding cost rose by 4 bps to 22.65% as the Open Repo Rate (OPR) remained at 22.50% while the Overnight Rate (OVN) increased by 8 bps to close at 22.79%.
Despite the net NTB settlement due Thursday, system liquidity is expected to remain firm, and analysts said funding rates are likely to trade around current levels. Naira Rallies Ease Corporate Foreign Payments Burden
