By Seun Ibiyemi
Interbank rates experienced mixed movement last week despite a continued surplus of liquidity in Nigeria’s money market, which remained robust at ₦6.12 trillion.
This stability was maintained following significant Open Market Operations (OMO) activity by the Central Bank of Nigeria (CBN).
The banking system’s liquidity actually strengthened, rising by ₦204.69 billion to ₦5.53 trillion, largely driven by increased commercial bank deposits held with the CBN.
Despite these elevated liquidity levels, short-term benchmark rates reflected minimal funding pressure.
To actively curb this excess liquidity, the CBN floated ₦600 billion worth of OMO bills across 85-day, 99-day, and 120-day tenors. The auction saw very strong investor demand, with total subscriptions surging to ₦4.1 trillion. Ultimately, the apex bank allotted a higher volume of ₦998.1 billion at an average stop rate of 20.1 per cent.
Figures from the FMDQ Securities Exchange showed that interbank rates largely stabilized: the Open Repo Rate (OPR) remained unchanged at 24.50 per cent, while the Overnight Rate (OVN) saw a marginal one basis point dip to 24.88 per cent.
In the Treasury Bills secondary market, the Nigerian Interbank Treasury Bills True Yields (NITTY) displayed a mixed performance, indicating varied investor sentiment.
Yields on short- to medium-term maturities (1-month, 3-month, and 6-month) declined, falling by 10, 24, and 6 basis points, respectively.
Conversely, the 12-month yield rose by 14 basis points. Overall, the average NTB yield dropped by 13 basis points to 17.80 per cent.
Looking ahead, analysts at AIICO Capital Limited project that interbank rates could moderate further, citing the anticipated inflow of ₦905.23 billion from maturing OMO bills and the lack of major near-term funding obligations.
The overall system liquidity had notably strengthened the previous week to ₦5.73 trillion from ₦4.02 trillion, primarily supported by the massive inflow from the ₦905.23 billion in maturing OMO instruments, which offset significant outflows from Federal Government bond and OMO allotments.