Money Market Rates Mixed as System Liquidity Shrinks
Money market rates were mixed as financial system liquidity shrank following the Central Bank of Nigeria’s (CBN) aggressive sterilisation of funds.
Market liquidity opened the day with a credit balance of N4.11 trillion, representing a significant decrease of N1.15 trillion from Wednesday’s closing level, due to a Treasury Bills Auction Settlement of N1.19 trillion.
The Apex Bank has been aggressive in reducing excess liquidity in the financial system with two straight open market operations that reduced the credit balance by about N3.7 trillion between Monday and Tuesday.
A day after, the authority conducted a Treasury bills auction where it raised approximately N1.2 trillion against the N600 billion offered across standard tenors, with moderate rate repricing at the end of the curve,
The interbank market closed mixed on Thursday as the overnight Nigerian Interbank Borrowing Rate (NIBOR) climbed 3bps to 22.21%, Cowry Asset Limited told investors in a note.
The investment firm said longer-dated tenors bucked this trend, with the 1-month, 3-month, and 6-month rates declining by 20 bps, 41 bps, and 53 bps, respectively.
Meanwhile, short-term funding costs diverged as the overnight rate rose by 9 bps to 22.25%, while the Open Repo rate remained flat at 22.00%.
“Interbank rates are expected to remain range-bound in the near term, supported by current system liquidity levels”, Herwood Capital Limited said in an update.
Concurrently, the Treasury Bills secondary market closed varied as yields climbed across most tenors. The firm said rates on the 1-month, 3-month, and 6-month papers advanced by 5bps, 5bps, and 14bps, respectively, whereas the 12-month yield dropped by 4bps.
Ultimately, increased trading activity and improved investor appetite pulled the average NT-Bills yield down by 1bp to 18.40%. #Money Market Rates Mixed as System Liquidity Shrinks CBN Targets N750bn in Upcoming Treasury Bills Auction
