Money Market Rates Crash as Liquidity Hits N1.2Trn
Short-term benchmark interest rates dipped strongly in the money market on Thursday as liquidity level in the financial system climbed to N1.18 trillion.
Investment banking firm, Futureview Finance Limited said liquidity in the financial system increased to N1.18 trillion on Thursday from N174.1 billion at the close of trade on Wednesday.
This caused a decline in Nigerian interbank offered rates, down by 57 basis points to close at 25.11%. Analysts reported that key money market rates such as the Open Repo Rate (OPR) and Overnight Lending Rate also nosedived, falling far below average of 30%.
Data from FMDQ securities exchange obtained confirmed that the open repo rate dropped by 2.65% to close the day at 23.71%. The overnight lending rate also drop by 2.60% to 24.54%.
Cowry Asset told investors that Nigerian True Treasury Yield, NITTY, rates showed a mixed performance across tracked tenor buckets, even as the average secondary market yield on T-bills rose by 0.09% to reach 19.90%.
Funding rates marinated below 30% last week over steady liquidity requirement by local deposit money banks.
As of Friday, the overnight rate contracted by 440bps to 26.3%, as inflows from FAAC disbursements of about N400.00 billion completely offset the debits Nigerian Treasury bills worth N11.00 billion.
Consequently, the average system liquidity for the week settled at a net long position of N684.11 billion from N377.38 billion in the prior week, according to Cordros Capital Limited.
The investment projected that inflows from FGN bond coupon payments worth N29.84 billion and OMO maturities totaling N15.00 billion will likely keep the system’s liquidity healthy in the absence of any significant mop-up action by the CBN. #Money Market Rates Crash as Liquidity Hits N1.2Trn
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