Short-term Rates Increase Sharply as Banking System Liquidity Dips
Money market rates increased sharply as liquidity levels in the Nigerian banking system declined following the OMO and Treasury bills auction. The market woke up to N500 billion OMO bill auction, and on Wednesday, the Debt Management Office launched its N515 billion Treasury bills for subscription.
The auctions mopped up a significant amount from the financial system, resulting in a spike in short-term benchmark interest rate on money market instruments.
In the absence of significant inflows from maturing instruments, analysts expressed views that rates in the money market would cross the 30% range —tracking behind the Central Bank of Nigeria’s (CBN) standing lending facility rate.
In its note, TrustBanc Financial Group Limited highlighted that liquidity in the banking system inched lower by about 7%, opening the day at ₦428.06 billion long, from N459.8 billion in the previous day.
Pressure on funding was attributed to the net settlement of the NTB auction winnings. At the close of the business session, interbank rates rose significantly. Specifically, the Overnight Policy Rate (OPR) increased by 2.67%, closing at 29.67%, while the Overnight Rate (O/N) edged up by 3.25% to settle at 30.75%.
Barring any significant debits, analysts expect the system to remain buoyant while interbank rates trade at current levels. #Short-term Rates Increase Sharply as Banking System Liquidity Dips Cryptocurrencies Market Cap Rises as Bitcoin Pops Higher
