Weak Liquidity Keeps Interbank Rates at Double Digits

Weak Liquidity Keeps Interbank Rates at Double Digits

Weak liquidity in the financial system has kept interbank rates at high double digit amidst scarcity of matured inflow. Analysts noted the interbank funding rates remained elevated at double digits as financial system liquidity opened in a deficit of N67.9 billion, from a surplus of N18.1 billion.

However, the Open Buy Back (OBB) and Overnight (O/N) rates eased to 12.25% and 12.50% from 14.50% and 15.00%, respectively.

“Funding pressures are expected to remain elevated on Monday but may ease on Tuesday due to maturing open market operations (OMO) bills worth N100.7 billion”, Chapel Hill Denham said.

Sentiments were broadly mixed in the fixed income market, analysts said in a comment. In the segment of the bill, discount rates on the Treasury bill benchmark curve compressed by an average of 11 basis points (bps) to 3.56%.

Meanwhile the open market operations curve expanded by an average of 6 bps to 6.16%.

In the bond market, yields expanded across the benchmark curve by an average of 11bps to 10.96%, due to duration apathy which pushed intermediate and long-term yields higher.

A rollover Treasury bill auction is expected to hold next week, with N69.6 billion on offer, split between 91-day (N15.9 billion), 182-day (N4.5 billion), and 364-day (N49.1 billion) bills.

Analysts said the previous auction cleared at 2.0%, 3.5% and 8.0% respectively.

In the foreign exchange market (FX), naira continued to trade within a tight band at all segments. In the Investors and Exporters Window, the local currency appreciated further by 0.16% or N0.65 to 409.00.

Again, it the parallel market, Naira paired against dollar traded flat at 485.00. Similarly, the FX rate remained unchanged in the official and Secondary Market Intervention Sale (SMIS) segments at 379.00 and 380.69 respectively.

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Weak Liquidity Keeps Interbank Rates at Double Digits