Robust Liquidity Keeps Money Market Rates in Check
Money market rates declined further as robust liquidity balance in the financial system continued to keep the short term benchmark interest rates movements in check. The market witnessed additional inflows from matured OMO bills, while there was also an outflow related to FX auction.
Consequently, the short term benchmark interest rates nosedived again in the market while banks funding pressure eased significantly.
The Nigerian interbank borrowing rate (NIBOR) declined across most maturities, with the overnight, 3-month, and 6-month tenors falling by 1.30%, 0.52%, and 1.04%, respectively, to settle at 26.58%, 27.58%, and 27.88%, Cowry Asset Limited said.
The firm said this reflects increased liquidity within the banking system. Banks have been under intense pressure to meet their daily liquidity requirements. The previous tightness in liquidity level had caused local lenders to borrow at steep rates.
Data from the FMDQ platform also confirmed that the Open Repo Rate (OPR) and the Overnight Lending Rate (O/N), also dropped by 0.79% and 0.78%, closing at 26.53% and 26.95%, respectively.
In a note, AIICO Capital Limited noted that system liquidity balance in the financial market remained strong, although with a slight decline. The investment firm said the stability experience in the financial system was mainly supported by inflows from the maturity of OMO totaling ₦325 billion.
The inflows was noted to offset the settlement from the Central Bank of Nigeria’s (CBN) foreign exchange (FX) intervention sales to local banks today.
Overall, both the Overnight Policy Rate (OPR) and the Overnight Rate (O/N) experienced decreases, with the OPR dropping by 79 bps and the O/N by 78 bps, closing at 26.53% and 26.95%, respectively. #Robust Liquidity Keeps Money Market Rates in Check
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