Money Market Rates Mixed on Excess Liquidity in Banking System
Money market rates diverge amidst excess liquidity balance in the financial system. The surplus liquidity has kept rates movement in check in the last few weeks, and analysts are projecting similar experience until after the midweek Treasury bills auction.
Analysts said midweek auction will be paid for few hours after, suggesting that liquidity level could switched to deficit in the absence of additional inflows to compensate for the debits.
According to Cowry Asset Limited, the Nigerian interbank offered rate (NIBOR) experienced a decline across all maturities, signaling enhanced liquidity within the banking system. Data from the FMDQ platform revealed that the short-term interest rates benchmark remained below 20% at the end of business session in the financial market on Monday.
Many banks experienced near zero worry for funding, reversing the previous trend before FAAC credit, Remita, and FGN coupon inflows lifted liquidity levels in the recent time. Rates had crossed near 33% apiece in the money market in the latter part of Oct due to outflows relating to the Central Bank of Nigeria’s primary market auction sales and FX intervention debits.
On Monday, the liquidity in the banking system opened the week with a healthy balance of ₦375.53 billion, TrustBanc Capital Limited said in a note. As a result, the open repo rate declined further by 3 bps to close at 19.22%, while the overnight rate inched higher by a basis point to settle at 19.69%.
“We believe the system will retain its surplus liquidity, with funding rates holding steady at current levels,” the firm said. In its note, AIICO Capital Limited hints that system liquidity stayed relatively buoyant due to the absence of significant debits. #Money Market Rates Mixed on Excess Liquidity in Banking System Liquidity: Banks Drive Yield Surge with T-Bills Selloffs
