Overnight Rate Drops on Money Market Liquidity Boost
Reflecting the absence of financial pressures, the overnight interest rate has declined following a significant rise in money market liquidity, which has now reached N6.8 trillion.
This improvement in liquidity represents a 2.43% increase, rising from the previous level of N 6.62 trillion, supported by banks’ activities at the Central Bank’s standing lending facility.
Market analysts reported that the liquidity surge was primarily attributed to a 2.54% rise in the balances held in standard deposit facilities, indicating that banks are increasing their deposits with the central bank.
With the funding position, the overnight lending rate has eased by 5 basis points to 22.28%, according to data obtained from the FMDQ platform.
Meanwhile, the open repo rate remained stable at 22.00%, indicating consistent demand for short-term funds in the market. These shifts suggest a more favourable liquidity environment for financial institutions.
In the Treasury Bills segment, secondary market yields showed varied performance: the 1-month and 6-month maturities rose by 14bps and 15bps, respectively, whereas the 3-month and 12-month maturities each declined by 2bps.
The overall Nigerian Treasury Bills average yield increased by 5bps to 17.71%, reflecting diminished investor sentiment and a less supportive climate in the secondary market.
