Money Market Rates Mixed on Excess Liquidity in Banking System
Money market rates mixed as financial system liquidity improved following additional placement by the deposit money banks on Thursday. Local lenders placed funds at the Central Bank of Nigeria (CBN) standing deposit facility (SDF) window, at a 24.50% SDF rate.
The placement has been surging as the yield on Nigerian Treasury bills fell below the SDF rate after the monetary policy rate cut in Sept – with banks seeking to maximise earnings from interest-yielding assets.
The authority’s huge liquidity mop-up via a series of open market operations in the recent week and a one-time Nigerian Treasury bills auction last week have tightened liquidity size.
MarketForces Africa reports that the CBN took out N5.32 trillion from OMO sold to foreign portfolio investors and banks. Though the funding profile is still positive, the open repurchase rate has seen sluggish movement while the overnight lending rate occasionally adjusts.
Reflecting limited liquidity surplus, Nigerian interbank rates increased across all tenors on Thursday, with overnight rates climbing marginally by 0.04% to 24.87% due to heightened interbank borrowing.
Market reports highlighted that the financial system liquidity improved by 11.11% to NGN1.80trn from NGN1.62trn of the previous close, driven by a NGN0.21bn increment in SDF placement by local banks.
Consequently, interbank rates moderated, with the Overnight (OVN) rate easing to 24.84% (vs 24.90% previously), while the Open Buy Back (OBB) rate was held constant at 24.50%.
The Treasury Bills secondary market displayed mixed performance. Despite these divergent movements, the average Treasury Bills yield dropped significantly by 133 bps to 16.04%.
This signal continued bullish sentiment and exceptionally strong investor appetite in the secondary market. # Money Market Rates Mixed on Excess Liquidity in Banking System CBN Grabs Full Control of the Debt Market – What It Means for Investors

