Money Market Rates Spike over Banking System Liquidity Squeeze
Money market rates—open repo rate and overnight lending rate—surged by 482 bps and 478 bps to reach 31.40% and 31.90%, respectively, as system liquidity closed at a short position of N29.1 billion.
The interbank market swung to a deficit position due to CBN foreign exchange settlements and commercial bank outflows to the central bank, AIICO Capital Limited said in a note.
Analysts explained that the liquidity squeeze drove rates sharply higher, with benchmarks reaching 32%. The repo rate jumped 4.82% to 31.40%, while the overnight rate rose 4.77% to 31.90% ahead of huge inflows, which are expected to upturn the liquidity balance.
The market anticipates FAAC inflows will restore liquidity, likely pulling rates down to the 26.5-27% range on Wednesday in the absence of a midweek Treasury bills auction. #Money Market Rates Spike over Banking System Liquidity Squeeze Burkina Faso Unlocks Access to Additional Loans from IMF
