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Money market rates dipped on Monday as liquidity levels in Nigeria’s financial system improved ahead of bond auction debits. Despite the absence of substantial inflows into the financial markets, which had previously kept rates elevated, this recent liquidity boost eased some pressure on money market rates.
In an effort to manage liquidity growth in the Nigerian economy, primary market auctions have continued to flood the market. As local deposit money banks (DMBs) meet their funding needs, many have turned to the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF) for support, while cash-rich banks are leveraging the Standing Deposit Facility (SDF) to capitalize on rate adjustments.
According to Cowry Asset Limited, the Nigerian Interbank Offered Rate (NIBOR) showed mixed movements across various tenors on Monday. The 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%, settling at 28.62%, while the overnight NIBOR remained unchanged.
Additionally, key money market rates, such as the Open Buy Back (OBB) and Overnight Lending Rate (O/N), declined by 0.08% and 0.06%, closing at 32.25% and 32.50%, respectively.
AIICO Capital Limited noted a slight improvement in system liquidity at the start of the week, although it remains in negative territory. Analysts believe that while interbank rates have eased slightly, market conditions are expected to remain tight due to the upcoming outflows associated with the Federal Government of Nigeria (FGN) bond auction.
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