Money Market Rates Fall as Liquidity Pressures Ease

Money market rates fell slightly as liquidity level in the financial system improved. The latest declined in short-term benchmark interest rates reversed previous trend seen in the past few weeks.

Funding demand had consistently kept money market rates heated up at double digit highs – on the back of changing market dynamics and series of outflows relating to auctions.

Opening system liquidity improved today, with fewer players exposed to Central Bank of Nigeria’s (CBN) standing lending facility (SLF) window, AIICO Capital Limited said in a note.

In its note, Futureview Financial told investors that system liquidity increased to N1.16 trillion on Thursday. MarketForces Africa reported that the market has been trading with negative liquidity balance this week.

And there was negative liquidity balance carried over into the week, with some banks exposures at the CBN lending facility hitting the roof.

Some banks had pitched their tents at the borrowing window to meet funding obligation on the back of tight liquidity in the financial markets in recent past.

Data from the FMDQ platform confirmed that the Open Repo Rate (OPR) decreased by 22 bps to 32.28%, while the Overnight Rate (O/N) fell by 32 bps to 32.58%.

Nigerian interbank offered rate (NIBOR) however rose across most maturities signaling that liquidity level in the banking system is still relatively weak, Cowry Asset Limited stated in a note. #Money Market Rates Fall as Liquidity Pressures Ease

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