Short-Term Rates Diverge as OMO Inflows Flood Money Market
The short-term benchmark interest rates closed the trading session on a mixed note as inflows from expired OMO bills boosted liquidity level in the financial system on Tuesday.
The market liquidity opened the day with a surplus of about ₦2.2 trillion even with the Central Bank of Nigeria’s (CBN) aggressive liquidity actions that drain the system by more than N5.3 trillion.
The liquidity surge witnessed kept interbank rates movement tight, and banks’ activities at the standing deposit facility window remained active.
The financial system increased to N2.153 trillion, according to data released by AIICO Capital Limited, due to an inflow totalling ₦481.3 billion from OMO maturity.
Hence, the Nigerian interbank rates remained unchanged on Tuesday, with overnight rates holding steady at 24.86% amid previous week’s money market operations.
Funding costs showed marginal movement as the overnight rate eased 3bps to 24.87%, while the Open Purchase Rate stayed at 24.85%. Market analysts anticipate funding cost to remain at similar level, barring any funding activity.
The Treasury Bills secondary market displayed mixed performance on Tuesday, with short-term 1-month and 3-month yields rising 11 bps and 6 bps, respectively, while longer-term 6-month and 12-month rates declined 4bps and 7bps respectively.
Despite these varied movements, the average Nigerian Treasury Bills yield inched up 0.5bp to 17.38%, indicating continued bullish sentiment and robust investor appetite in the secondary market.
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