Tight Liquidity Elevates Interbank Rates, T-Bills Unchanged
On Wednesday, amidst tightened liquidity in the money market, interbank funding rates remained elevated.
Analysts explained that rates were largely elevated within double digits following liquidity tightening.
Explaining the trend, Chapel Hill Denham said financial system liquidity opened lower at ₦29.3 billion from ₦42.2 billion on Tuesday.
Consequently, the Overnight lending rate rose by 8 basis points to 15.75%, while the Open Buy Back rate closed flat at 14.67%.
“We expect financial system liquidity to remain tight, as no major maturities are expected this week”, Chapel Hill Denham stated.
Meanwhile, in the fixed income the bullish run grounded to a halt on Wednesday, due to tight system liquidity and profit-taking.
Analysts explained that the front end of the curve remained scantily traded, with rates on Nigerian Treasury Bills (NTBs) unchanged at 2.54%.
Meanwhile, open market operations (OMOs) rose by 4 bps to 4.67%.
Also, in the bond market, some select maturities at the long end of the curve (notably APR 2037) recorded some interests, intermediate maturities traded flat.
However, upward repricing of JAN 2022 which surged 55 bps to 4.95% drove short term bond yields higher by an average of 13 bps to 5.33%.
Analysts at Chapel Hill Denham said across the curve, bond yields rose by a marginal 1 basis point to 8.45%.
In the foreign exchange market, the USD/NGN depreciated by 54 kobo (-14 bps) at the Investors & Exporters window to ₦387.17.
But recouped losses in the parallel market by ₦5.0 (1.1%) to close at 455.
The currency pair was unchanged at ₦361 and ₦380.69 at the official and SMIS windows, respectively.
The external reserves stood at US$36.25 billion, having dropped by 0.9% month to date as at 23 June 2020.