Short-term Benchmark Interest Rates Dip as Liquidity Rises
The short term benchmark interest rates declined sharply as the level of inflows into the banking system resulted in excess liquidity. With lower funding requirement by local banks, the liquidity position has been more than enough to meet funding requirements.
The money market ended the year 2024 with negative balance totaling N166 billion following OMO auction settlement and net cash reserves maintenance debit by the Central; Bank of Nigeria. Liquidity in the system started much higher earlier this week, driven by significant Remita inflows from Friday.
The CBN conducted an OMO auction, offering ₦500 billion across two maturities while receiving subscriptions amounting to ₦931.32 billion. Additionally, the CBN engaged in CRR activities in the market to reinforce its tightening monetary policy approach.
As a result of relatively strong liquidity condition in the money market, the short-term benchmark interest rates eased below 28% apiece. The Nigerian Interbank Offered Rate (NIBOR) experienced downward movements across all maturities, signaling liquidity in the banking system, according to Cowry Asset Limited.
Due to absence of significant fund need from banks, the open repo rate (OPR) fell by 0.61% to 26.69%, while the overnight lending rate (O/N) decreased by 0.55% to 27.25% on the day.
System liquidity improved by 312%, starting the year with a strong surplus balance of N353.26 billion, TrustBanc Financial Group said in its report. Given the current liquidity balance, analysts said they expect funding rates to hover around prevailing levels. #Short-term Benchmark Interest Rates Dip as Liquidity Rises FBN Holdings Records Huge Off-Market Shares Transactions
