Money Market Rates Mixed on Robust Liquidity in Financial System
Money market rates closed on a mixed note on the back of a robust liquidity level in the financial system. The repo rate (OPR) held firm at 26.50% while the overnight lending rate edged up 2 basis points (bps) to 26.96%.
The banking system liqudity reduced by N57.66 billion following Treasury bills auction sales and repayment. This brough the opening net long position to N1.09 trillion according to Erad Partners Limited.
The short-term benchmark market rates reacted to funding request from deposit money banks with lower activities at the Central Bank of Nigeria (CBN) Standing Lending Facility. The Apex Bank conducted open market operations early in the week to mop up huge inflows from OMO bills that matured. There was also Treasury bills auction on Wednesday, to ensure excess liquidity level was well managed.
On Thursday, Interbank liquidity stayed robust despite the CBN’s cross currency transaction settlement, keeping rates stable at 26.50%, AIICO Capital Limited said in a note. The amount of free cash that flowed around dropped low but sufficent to keep rates movement in check.
The investment firm said FAAC approved ₦1.659 trillion for distribution across government tiers, with ₦800 billion expected to be credited to the system. Analysts projected that short term benchmark interest rates are expected to hold steady at current levels tomorrow, with potential FAAC inflows likely to offset any upward pressure.
Nigerian Interbank Offered Rate, NIBOR, increased across all tenors, rising by 16bps, 34bps, 24bps, and 32bps for the overnight, 3M, 6M, and 12M rates, respectively—reflecting tighter system liquidity., Cowry Asset Management Limited said in a report.
The Nigerian Treasury Bills (NITTY) curve declined across all tenors—down by 28bps, 50bps, 47bps, and 87bps on the 1M, 3M, 6M, and 12M benchmarks, respectively—amid sustained demand for short-dated instruments, which drove the average yield 15bps lower to 20.42% in the secondary market. SAHCO: Analysts See Upside Potential on Strong Earnings Profile
