Short-term Interest Rates Rise over Banking Deficit Challenges
The short-term benchmark interest rates rose slightly in the money market as banks continue to face liquidity challenges. Deposit money banks raised about N9 trillion from the Central Bank of Nigeria (CBN) Standing Lending Facility to close their respective liquidity gap.
Tight inflows and a relatively stronger appetite for treasury bonds and other instruments have continued to remain a drag to liquidity boosts in the financial system.
Latest market data showed that interbank liquidity showed slight improvement at the opening but remained in negative territory, even after the net credit from the NTB auction settlement.
Despite receiving an inflow of ₦118.07 billion from bond coupon payments, liquidity in the banking system remained deep in the red, hovering around ₦700 billion, according to TrustBanc Financial Group Limited.
The banking system deficit increased to N726.1 billion, representing a moderate uptick from N722.6 billion. Hence, the Nigerian Interbank Offered Rate (NIBOR) trended downward across most tenors.
The overnight, 1-month, and 6-month rates declined by 0.06%, 0.01%, and 0.56%, settling at 32.86%, 26.89%, and 28.28%, respectively, Cowry Asset Limited said in a note.
Similarly, key money market indicators showed an upward movement, with the Open Repo Rate (OPR) increasing by 0.07% to 32.40% and the Overnight Lending Rate increasing by 0.07% to 32.90%
Analysts said the anticipated inflows from FAAC disbursements and OMO maturities, totalling about ₦1.50 trillion, are expected to ease liquidity pressures, potentially leading to lower funding rates. #Short-term Interest Rates Rise over Banking Deficit Challenges Oil Prices Increase amidst Ongoing Trade Tensions
