Money Market Elevated as Banks Raise N1trn from CBN

Money market rates rose further on the back of liquidity stress in the financial system. According to analysts, the weak balance in the financial system was triggered by the Central Bank of Nigeria (CBN) primary market auction sales and sterilization of 50% deposits taken by commercial and merchant lenders. 

The trend has continued to keep liquidity gluts in the market in check, thus raise money rates with tendency to push interbank borrowing costs higher for most of the tier-2 banks.

AIICO Capital Limited reported that the opening system liquidity plunged into negative territory, with over ₦1 trillion borrowed from the CBN’s Standing Lending Facility window.

As a result, the Open Repo Rate (OPR) and the Overnight Rate (O/N) increased by 13 basis points to close at 32.03%, data from the FMDQ platform confirmed . The overnight lending rate climbed by 15 basis points to end the day 32.40%.

“We anticipate elevated interbank rates, as the CBN plans to conduct an OMO auction tomorrow, offering ₦300 billion across 3 tenors”, AIICO Capital Limited said. #Money Market Elevated as Banks Raise N1trn from CBN Naira Rises against US Dollar Ahead of Sept. FX Auction