Overnight, Repo Rates Mixed as System Liquidity Fluctuates
The short-term benchmark interest rates moved in different directions as the liquidity level in the financial system fluctuated following an open market operation by the Central Bank of Nigeria (CBN).
The open repo rate closed steady, indicating a floor rate for the money market indicators on Tuesday, with banks’ borrowing activities at the standing lending facility slowing down sharply.
The overnight lending rate, however, increased, reflecting a mild pressure on funding resulting from a mix of inflows from expired OMO bills and settlement for a fresh auction floated by the authority.
The funding conditions was also weakened by the Debt Management Office’s (DMO) settlement of FGN bonds from Monday’s auction. Money market liquidity was boosted by ₦758 billion inflow from matured OMO bills.
Noting a surplus in the financial system, the CBN issued a ₦400 billion short-dated OMO auction to curb excess liquidity, drawing ₦710.96 billion in subscriptions and allotting ₦349.46 billion.
Despite the auction settlement, interbank rates held firm at 26.5%, AIICO Capital Limited said in a note. The open repo remained at 26.50%, while the overnight rate rose 4 bps to 26.96%. Analysts said rates should hold near 26.5% on Wednesday unless major funding pressures emerge.
The Nigerian Interbank Treasury Bills True Yield recorded gains across all tenors, with yields on the 1-month, 3-month, 6-month, and 12-month maturities increasing by 5 bps, 19 bps, 25 bps, and 9 bps, respectively. #Overnight, Repo Rates Mixed as System Liquidity Fluctuates Nigerian Bonds Face Sell Pressures, Yield Climbs by 12bps
