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Money market rates fell further on Monday, driven by a sustained high level of liquidity in the financial system. This liquidity was bolstered by a significant influx of funds, including over N900 billion from the Federation Accounts Allocation Committee (FAAC) and coupon payments on Federal Government of Nigeria (FGN) securities, among other inflows.
With minimal pressure on liquidity, short-term benchmark interest rates continued to decline as the Central Bank of Nigeria (CBN) announced the reopening of its Standing Lending Facility (SLF) window.
The CBN disclosed that it has allowed authorized dealer banks and other eligible financial institutions to access funds from its SLF at a rate of 31.75%. This decision follows adjustments made by the Monetary Policy Committee (MPC) to the upper corridor of the standing facilities.
“The suspension of the Standing Lending Facility is hereby lifted, and authorized dealers should submit their requests for SLF through the Securities Settlement System during the operating hours of 5:00 PM to 6:30 PM,” the CBN stated in a notice.
Reflecting the ample system liquidity, the Nigerian Interbank Offered Rate (NIBOR) continued to decline across various tenors in the money market, according to a market update from Cowry Asset Limited. The investment firm noted that the overnight NIBOR dropped by 263 basis points to 23.33% on Monday, as banks with excess liquidity sought lower borrowing costs.
Other key money market rates also fell, with the Open Repo Rate (OPR) and Overnight Lending Rate (O/N) decreasing by 81 basis points and 67 basis points, respectively, to close at 24.97% and 25.50%. The declines were attributed to the abundant liquidity in the financial system.
“We anticipate that interbank rates will rise tomorrow, depending on the outcome of today’s Open Market Operations (OMO) bills primary market auction,” noted AIICO Capital Limited.
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