Money Market Rates Dip as Financial System Liquidity Improves

The money market rates dip as liquidity level in the financial system improved on Monday ahead of bond auction debits. The absence of significant inflows into the financial markets has kept rates elevated.

In addition, the market has been flooded with primary market auctions as part of efforts to keep liquidity growth in Nigerian economy and markets in check.

To meet their funding demand, local deposit money banks have been accessing funds from the Central Bank of Nigeria (CBN) standing lending facility. Cash rich banks have ever continue to take advantage of rate adjusted via placement in standing deposit facility.  

On Monday, the Nigerian interbank offered rate (NIBOR) showed mixed movements across all maturities, according to Cowry Asset Limited. 

Analysts said 3-month and 6-month tenors increased by 0.09% and 0.33%, closing at 29.42% and 30.25%, respectively.

However, the 1-month tenor declined by 0.17% to settle at 28.62%, while the overnight NIBOR remained unchanged.

Key money market rates, such as the Open Repo Rate (OPR) and Overnight Lending Rate (O/N), also declined by 0.08% and 0.06%, closing at 32.25% and 32.50%, respectively.

Liquidity in the banking system showed slight improvement at the beginning of the week, although it remains in negative territory, AIICO Capital Limited said in a note.

While there was gradual improvement in interbank rates, analysts maintained that the market condition would remain tight due to outflow relating to FGN bond auction. #Money Market Rates Dip as Financial System Liquidity Improves

Naira Drops Market Wide, Exchange Rates Gap Now N102