Short-Term Rates Mix as Cross-Currency Swap Tightens Liquidity
Interbank rates closed on a mixed note as financial system liquidity continues to fluctuate. The open repo rate held firm, but the overnight lending rate inched higher as a huge outflow related to cross-currency swap repayment on Thursday by the authority tightened liquidity flow in the money market.
The short-term benchmark interest rates, however, stood firm even with the liquidity fluctuation; movement was limited due to excess funds in the financial system.
The market recorded inflows from FAAC inflows even with treasury bills auction. Still, Banks continue to place funds with the Central Bank of Nigeria (CBN) due to significant liquidity level which settled at N2.683 trillion.
The market recorded net outflow of N183 billion amidst increase activities in the space. In its commentary note, AIICO Capital Limited said the interbank market maintained ample liquidity despite the second tranche repayment of the cross currency swap estimated at ₦660 billion.
The system recorded net treasury bills settlement of ₦267 billion, strengthening the supply side, and this kept the short term benchmark interest rates firm at 26.5%.
The Federation Account Allocation Committee concluded its meeting on 17 September 2025, approving a total distribution of ₦2.225 trillion to the three tiers of government, with an estimated ₦1.415 trillion expected to enter the market.
The Nigerian Interbank Borrowing Rate (NIBOR) recorded a mixed outing with the Overnight rate falling marginally by 4 basis points to 26.88%, according to Cowry Asset Limited.
In contrast, the 1-month, 3-month, and 6-month rates increased by 8bps, 17bps, and 25bps respectively, reflecting improved system liquidity boosted by N2.22 trillion in FAAC inflow.
Money market rates also closed in a mix, with the Open Repo Rate (OPR) unchanged at 26.50%, while the overnight rate rose by 8bps to close at 26.96%.Market analysts anticipate interbank rates to continue trading at the current level barring any funding pressure.
However, the Nigerian Interbank Treasury Bills True Yield (NITTY) fell across maturities, with yields on the 1-month, 3- month, 6-month, and 12-month tenors declining by 68bps, 64bps, 98bps, and 76bps, respectively. The average yield for NT-Bills fell by 6bps to close at 18.37%, as investors maintain strong and positive sentiment in the secondary market. CBN to Sell Treasury Bills Midweek, Rates Projected to Taper
