Rates Stabilise as Financial System Liquidity Hits N1.5trn
Interbank rates steadied as liquidity level in the financial system surged to N1.5 trillion following huge inflows from matured OMO bills at midweek. The market closed with strong net position, reversing recent past trend following influx of inflows from FAAC, NLNG and matured Treasury bills last week.
The strong amount available for local deposit money banks reduced their persistent borrowing from the Central Bank of Nigeria (CBN) Standing Lending Facility (SLF) at steep rates.
Also, cash rich lenders are unable to demand for higher rates with more funds finding its way into standing deposit window instead.
Despite the absence of liquidity pressure in the money market, the Nigerian Interbank Offered Rate (NIBOR) rose across most tenors, except for the overnight rate, which declined by 0.17% to 26.83%.
Data from the FMDQ platform confirmed that key money market indicators remained stable, with the Open Repo Rate (OPR) unchanged at 26.50% and the Overnight Lending Rate holding steady at 26.96%
The market saw OMO repayment worth ₦651.86 billion. The huge inflows from matured bills boosted liquidity in the banking system by 55%, bringing it to ₦1.50 trillion, TrustBanc Financial Group Limited said in a report.
The investment firm said barring any unexpected outflows, liquidity levels are expected to remain stable, with funding rates likely to trade at similar levels in the near term.
Interbank liquidity remained robust, supported by ₦651 billion in OMO maturities, keeping rates stable—the Overnight Policy Rate (OPR) held at 26.50% and the Overnight Rate (O/N) at 26.96%.
Last month, system liquidity showed significant movements, influenced by various inflows and outflows. Early in the month, FAAC disbursements and FGN bond coupon payment and inflows NLNG refund boosted liquidity, reducing interbank rates.
However, liquidity tightened due to substantial NTB and OMO auction settlements, pushing rates higher. #Money Market Rates Stabilise as Financial System Liquidity Hits N1.5trn Yield Slides on Post Auction Demand for Nigerian Treasury Bills
