Money market rates fell as the financial system’s liquidity balance increased, ending in positive territory on Friday. According to investment banking documents, the spike was driven by inflows from matured government borrowing securities.
These include inflows from matured un-refinance OMO bills and coupon payments made by the FGN on bonds, as well as additional inflows from FAAC credits expected in the coming week.
Data from the FMDQ platform verified that the Open Repo Rate (OPR) and the overnight lending rate fell by 151 and 176 basis points, respectively, to 29.69% and 29.97%.
Analysts reported that financial system liquidity improved at the closed higher on Friday compared to the previous week, supported by OMO maturities and FGN bond coupon inflows.
The amount in the financial system increase strongly as inflows from FGN bond coupon payments worth N402.96 billion saturated the system, said Cordros Capital Limited.
In the new week, the market expects inflows from FAAC disbursements worth N828.08 billion and FGN bond coupon payments totaling N202.45 billion to outstrip debits at the FGN bond of N150.00 billion.
For most part of the week, liquidity was negative, with most Deposit Money Banks (DMBs) relying on CBN’s standing Lending Facility (SLF) to fund their operations, AIICO Capital Limited revealed.
Due to borrowing by the commercial banks, liquidity level in the money market inched higher by 62.4% week on week to close at N1.2 trillion, Afrinvest Limited said in a note.
Investment banking firms anticipate sufficient system liquidity in the new week due to FGN bond coupons and FAAC inflows. However, debits from NTB and FGN bond auctions may further exacerbate the liquidity situation.
The market expects to see inflows from FAAC disbursements totaling N828.08 billion and FGN bond coupon payments worth N202.45 billion in the week.
Consequently, the Open Repo Rate (OPR) and the Overnight Rate decreased by 151 basis points and 176 basis points, settling at 29.69% and 29.97%, respectively. In a related development, cash-rich commercial lenders however parked N566 billion into the standing deposit facility (SDF) of the CBN.
It represents interest rates that investors earn on money market accounts, which are interest-bearing deposit accounts that work similarly to savings accounts, analysts said.
