Short-term Interest Rates Fall over Excess System Liquidity
The short-term benchmark interest fell moderately in the money market due to a strong liquidity balance in the financial system at the beginning of the week. Interbank liquidity started the month positively, boosted by OMO maturities. The market recorded N279.29 billion inflows from the FGN bond coupon today.
As a result, interbank rates fell, with the Overnight Policy Rate (OPR) down 33 bps to 26.42% and the Overnight Rate (O/N) dropping 50 bps to 26.83% In the money market, the Nigerian Interbank Offered Rate (NIBOR) increased across most tenors, except for the overnight NIBOR, which declined by 1.14% to 27.40%.
Key money market indicators moved in the opposite direction, with the open repo rate (OPR) falling by 0.33% to 26.42% and the overnight lending rate decreasing by 0.50% to 26.83%.
Due to positive trading activities, the Nigerian Interbank Treasury Bills True Yield (NITTY) declined across most maturities. Similarly, the secondary market for Nigerian Treasury bills saw a decline in average yield.
Last week, financial system liquidity increased by N684 billion after OMO bill repayment, FGN bond coupon payment, and FAAC inflows. This drove net opening balance to a long position of N130.9 billion, Erad Partners Limited said in a note.
As a result, funding pressures eased considerably, with open repo and overnight lending rates falling by 558 basis points and 542 basis points to settle at 26.75% and 27.33%, respectively. #Short-term Interest Rates Fall over Excess Liquidity in Financial System FBN Holdings Records Huge Off-Market Shares Transactions
