Money Market Rates Steady, Banks Place N3.1trn with CBN
Surplus liquidity conditions in the money market has kept rate pricing in check, trending below the 25% floor, resulting in increased bank placement with the Apex Bank.
To boost their earnings, banks have been placing excess funds at the Central Bank of Nigeria (CBN) Standing Deposit Facility (SDF), earning 24.5% on their placements. Borrowing actions at the Standing Lending Facility (SLF) has slowed down from previous actions experienced last week.
The slowdown in CBN’s liquidity action kept rates movement in check while commercial banks placement surged on the day.
According to AIICO Capital Limited, market liquidity opened the day with a surplus balance of ₦3.8 trillion, representing a marginal increase of ₦21.6 billion from the previous position.
The investment firm said the improvement was primarily driven by an increase in the CBN’s Standing Deposit Facility (SDF) window to ₦3.1 trillion. Hence, the average funding costs held steady in the absence of significant funding pressure in the money market.
Money market funding costs remained unchanged, with both the overnight rate and Open Purchase Rate holding steady at 24.86% and 24.50%, respectively.
The market anticipates funding costs to remain at a similar level, barring any funding activity. Nigerian interbank rates declined across all tenors on Tuesday, with the overnight rate falling 13 bps to 24.80%, reflecting enhanced system liquidity.
The Treasury Bills secondary market displayed mixed movements on Tuesday, with 1-month and 3-month yields rising 34 bps and 1 bp, respectively, while 6-month and 12-month rates fell 9 bps and 4 bps, respectively.
Nevertheless, the average Nigerian Treasruy Bills yield edged down a basis point to 17.40%, reflecting positive and robust investor sentiment in the secondary market #Money Market Rates Steady, Banks Place N3.1trn with CBN Daily FX Rate: Naira Rises to N1,448/$ in Official Market
