Interbank Rates Fall as FAAC Inflow Boosts Liquidity

In the money market, interbank rates fell as inflows from Federal Account Allocation Committee (FAAC) bolstered liquidity balance in the financial system.

“System liquidity was bolstered by FAAC inflows, which offset bond settlement outflows, although it remained in negative territory”, CardinalStone Limited said in a note.

Money market rates have been on the double digits high side due to monetary policy rate hike and liquidity shortfall in the financial markets.

The rate direction has been noted to be top determinant on payments on banks money market deposits and mutual funds’ performances.

Banks have been taking credit from the Central Bank of Nigeria (CBN) standing lending facility at an elevated rate of 31.75% due to monetary policy tightening.

The rates also affect local lenders cost of funds to finance operation, but analysts said banks with huge deposits based are often at an advantage.

Outflow relating to huge bets at the Debt Management Office local bonds auction on Monday dragged the liquidity balance, but FAAC credit reduced the pressure.

Interbank rates—OPR and O/N—declined by 195bps and 183bps to settle at 30.41% and 30.78%, respectively, data from the FMDQ platform confirmed.

System liquidity was bolstered by FAAC inflows, which offset bond settlement outflows, although it remained in negative territory, CardinalStone Limited said in a note.

Analysts at Cowry Asset Limited stated that there was a general decline in Nigerian interbank offered rate (NIBOR) across most maturities. However, the Overnight NIBOR rose by 0.09%, reaching 32.47%.

Elsewhere, Nigerian Interbank Treasury Bills True Yield (NITTY) experienced upward movement across most maturities, while the average secondary market yield on T-bills moderated by 0.04%, settling at 24.11%. #Interbank Rates Fall as FAAC Inflow Boosts Liquidity

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