Interbank rates decreased considerably following inflows from the Federal Account Allocation Committee (FAAC), which slammed the financial system on Monday. The FAAC credits reversed the tightening funding profile in the money market, lowering rates by around 10% each.
The large balance in the space would lower interest rates at local banks that borrowed from the central bank or themselves. According to a market report from Futureview Financial Services Limited, the system opened with more than N1 trillion at the close of business on Friday, up from N704 billion.
Specifically, the open repo rate decreased by 9.54% to 20.15% and the overnight rate decreased by 9.17% to 20.80%. The two short-term benchmark interest rates had crossed 31% in the recent past week. Last week, liquidity pressure mounted, with rates trending at double digits ahead of inflows from maturing instruments in the debt market.
“We anticipate the interbank rates will remain at similar levels while awaiting the decision at tomorrow’s MPC meeting and the primary market auction debits for the week,” analysts at AIICO Capital Limited said.
Investment firm Cowry Asset Limited reported that Nigerian interbank rates declined across all tenors, reflecting system liquidity.
