Money Market Rates Mixed, Liquidity Deficit Moderates
The short-term benchmark interest remained high due to a liquidity deficit in the financial system. According to data from the FMDQ, interbank rates remained high at 32.5% due to subsisting liquidity pressures in the money market due to the absence of significant inflows.
The Overnight Policy Rate (OPR) increased by 8 bps to 32.25%, while the overnight lending rate dropped by 9 bps to 32.58%, AIICO Capital Limited confirmed in a note. The money market rates are expected to remain elevated as there will be no major inflow that will upturn negative liquidity positions in the money market.
Yesterday, the financial system liquidity deficit declined to N247.53 billion from N280.57 billion amidst increased borrowing activities at the Central Bank standing lending facility.
Banks with funding demand are meeting the daily liquidity gap with borrowing, and cash-rich tier-1 lenders have started to demand for high rates to part with their funds.
In the absence of inflows from maturing instruments, there have been no primary market auctions this week, and the liquidity deficit is projected to increase at the close of business on Friday.
The Nigerian Treasury Bills (NITTY) curve recorded mixed yield movements across all maturities, reflecting varied investor sentiment. Nonetheless, activity in the secondary market remained subdued, with limited trading interest, as the average yield held steady at 18.36%.
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