Rates Mixed on Liquidity Swings, Banks Halt Borrowings from SLF
Interbank rates moved in different direction amidst liquidity fluctuation in the financial system. The short term benchmark interest rates remained lower, with intermittent movement based on direction of banking system liquidity.
The funding remained positive as local banks continue to play strong at the Central Bank of Nigeria (CBN) standing deposit facility (SDF) window to sterilised excess funds, though earning subpar rate.
Activities of the deposit money banks at standing lending facility (SLF) have reduced sharply since liquidity surplus surface and the CBN has refused to float OMO bills for subscriptions despite latest round of inflows from expired bills.
The CBN standing lending facility window remained inactive for the 10th straight session, reflecting minimal funding pressure. The absence of monetary action to mop up liquidity keeps the funding profile strong, but the latest outflow for foreign currency, the US dollar, sold to banks shakes the system – albeit marginally.
The CBN sold $20.7 million to banks on Tuesday to boost FX supply and keep the naira strong. This action replaced the anticipated OMO auction.
NIBOR exhibited mixed performance on Thursday, with the overnight rate increasing slightly by 4 basis points to 26.83%, Cowry Asset Limited said in a report.
Money market rates showed mixed dynamics, with the open repo rate (OPR) rising by 8 basis points to 26.50%, while the overnight rate remained steady at 26.96%.
In contrast, the Nigerian Interbank Treasury Bills True Yield (NITTY) recorded increases across all tenors, with yields on the 1-month, 3-month, 6-month, and 12-month maturities rising by 4, 25, 12, and 8 basis points, respectively.
However, the average yield for NT-Bills decreased by 6 basis points to 18.73%, indicating robust and positive investor sentiment in the secondary market. #Rates Mixed on Liquidity Swings, Banks Halt Borrowings from SLF Banking, Insurance Sectors Drive NGX Index Higher by 29bps
