Money Market Rates Slump as Liquidity Improves
Money market rates slide on Tuesday as the liquidity level in the financial system improves as funds flow towards the segment. Highly liquid Nigerian big banks have played strong in the market as interbank rates persistently stayed in double digits high.
Shoring up cash position via the standing lending portfolio of the central bank has increased as smaller banks, in particular, strive to meet their respective cash requirement.
In the market, the Nigerian interbank offered rate moved in a mixed direction, according to analysts at Cowry Asset Management Limited. Although, short-term benchmark rates: the open repo (OPR) and the overnight lending rate (OVN), narrowed to 14.38% (from 15.75%) and 15.25% (from 16.25%), respectively.
Opening market liquidity was reported at N187.7bn on Friday, according to market data. Call, overnight and repo rates closed within a range of 5% – 15%, as system liquidity tightened on the back of T-Bills and foreign currency auctions.
For the current week, Coronation Research predicted that rates in the money market to remain elevated as the projected outflow from an FGN Bond, OMO auctions, and a potential CRR debit by the CBN would likely outweigh potential inflows from a potential Treasury maturity.
The Nigerian Interbank Treasury Bills True Yields fell across all tenor buckets tracked, analysts said, saying that the average secondary market yield on T-bills moderated to 8.24%. Read: Naira Improves as Gross External Reserve Rises
The Treasury bills market has been in rally mode ahead of the Christmas holiday even while the local stock market remains upbeat, a trend that started in November despite a 100 basis points interest rate hike.
Traders said in their market noted that the yield curve sloped downward due to buying interest on the 07 Sep 2023 T-bill (falling by a basis point) and the 09 Mar 2023 (declining by 85 basis points) T-bills. # Money Market Rates Slump as Liquidity Improves