Interbank Rates Heat Up as Financial Market Liquidity Squeezes

Interbank rates heated up due to sustained weakness in the liquidity balance in the financial markets. Money market rates have remained elevated to reflect the going funding profile with banks borrowing from the Central Bank to close liquidity gap.

The absence of significant inflows into the financial market keeps interbank rates elevated, boosting return on money market deposits accounts. Reflecting key drivers of money market rates, Futureview Financial Services Limited said liquidity balance declined to N773.48 billion on Tuesday from N814.64 billion on Monday.

Investment banking firm Cowry Asset Limited reported that Nigerian interbank borrowing rate (NIBOR) declined across all maturities signaling improved liquidity in the banking system.

But key money market rates, such as the Open Repo Rate (OPR) and Overnight Lending Rate (O/N), increased by 0.11% each, closing at 32.36% and 32.61%, respectively.

Analysts also said Nigerian Interbank Treasury Bills True Yield saw an upward movement across most maturities, while the average secondary market yield on T-bills moderated by 0.03%, settling at 24.14%. #Interbank Rates Heat Up as Financial Market Liquidity Squeezes Reforms: Fitch Revises Nigeria’s Outlook to Positive