OMO Inflow Boosts Money Market Liquidity, Funding Rates Rise
Money market funding rates inched higher amid rising liquidity in the financial system, bolstered by an inflow of more than N2.4 trillion from matured OMO bills.
Following a moderate increase on Tuesday, the short-term benchmark interest rate continues to hover around the floor rate set after last month’s monetary policy adjustment.
Reflecting sustained robust liquidity conditions in the financial system, the Nigerian Overnight Financing Rate (NOFR) remained stable at 20%.
The banking system experienced a 60.55% liquidity surge on Tuesday ahead of the Central Bank of Nigeria (CBN) midweek primary market auction for Treasury bills.
Market reports revealed that the banking system’s liquidity profile improved sharply to approximately N6.49 trillion on Tuesday, up from N4.04 trillion, a 61% jump over the last 24 hours.
Market analysts attributed the increase in credit balance to N2.41 trillion inflow from expired OMO bills that flooded the financial system. Despite the significant addition, Apex Bank did not conduct an open market operation to reduce excess liquidity.
At the midweek Treasury bills auction, the Debt Management Office (DMO), on behalf of the CBN, will offer N450 billion in papers for investors’ subscription.
The Open Repo rate rose to 20.40% from 20.00%, and the Overnight rate edged up to 20.81% from 20.72%. The average Treasury bill rate was almost flat at 17.86%, and NOFR was unchanged at 20.00%. Interbank Rates Climb as System Liquidity Surplus Moderates
