Interbank Rates Surge as Banks Borrow from CBN Window

In the money market, pressure on financial system liquidity kept the short term benchmark interest rates elevated while banks continue to borrow from the Central Bank of Nigeria.

Due to weak inflows from maturing instruments, money market rates climbed further with both overnight and repo rates staying elevated at 32% range.

Yesterday, the financial system liquidity improved, although it remained negative, with over ₦1.5 trillion exposed to the CBN’s standing lending facility (SLF) window, AIICO Capital Limited said in a note.

But data from the FMDQ platform confirmed that the Open Repo Rate (OPR) increased by 11 basis points to 32.30%, while the Overnight Rate (O/N) settled at 32.68%.

The rates at which banks borrow from peers in the industry increase while the CBN set SLF rate at 31.75% after policy rate adjustment.

High rates on money impacts banks costs of funds, analysts said, noting that liquidity shortage in the financial system is a normal condition that sets rates direction for funds allocation.

The Nigerian interbank offered rate (NIBOR) rose across most maturities. While, the Overnight NIBOR declined, indicating improved liquidity in the banking system for a very short term, Cowry Assets Limited said in a note.

Nigerian Interbank Treasury Bills True Yield (NITTY) experienced upward movement across most maturities, while the average secondary market yield on T-bills rose by 0.43%, settling at 23.54% due to sell-sentiment. #Interbank Rates Surge as Banks Borrow from CBN Window

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