Money market rates surged as the Central Bank of Nigeria (CBN) intensified liquidity controls in preparation for a Nigerian Treasury Bills auction on Wednesday. The CBN’s actions followed significant liquidity inflows of ₦459 billion from maturing Open Market Operation (OMO) bills, pushing the financial system’s liquidity to a robust ₦1.470 trillion by Wednesday’s close.
To curb excess liquidity, the CBN conducted a short-dated OMO auction, offering ₦600 billion. The auction drew strong demand, with subscriptions totaling ₦1.179 trillion, and ₦620.65 billion in OMO bills allotted to foreign portfolio investors and local banks. Despite the liquidity mop-up, interbank rates remained elevated at 26.5%. According to AIICO Capital Limited, the Open Repo Rate (OPR) and Overnight lending rate edged up by 7 basis points to 26.50% and 26.96%, respectively.
The Nigerian Interbank Offered Rate (NIBOR) rose across all maturities, with the Overnight rate increasing by 15 basis points to 26.93%, and the 1-month, 3-month, and 6-month rates climbing by 17, 18, and 42 basis points, respectively, reflecting heightened liquidity demand among financial institutions. However, money market rates showed mixed trends, with the OPR dipping by 8 basis points to 26.42% and the Overnight rate falling by 7 basis points to 26.88%.
In the Nigerian Treasury Bills market, yields displayed varied performance. The 1-month, 3-month, and 6-month tenors saw yield declines of 18, 21, and 4 basis points, respectively, while the 12-month tenor surged by 63 basis points. The average yield on Nigerian Treasury Bills dropped by 18 basis points to 18.85%, signaling strong investor confidence in the secondary market ahead of the ₦480 billion auction.
Analysts expect short-term benchmark interest rates to stabilize around 26.5% midweek, barring significant funding pressures. The CBN’s ongoing liquidity management and global monetary policy tightening, including rate hikes by major central banks like the U.S. Federal Reserve, continue to influence Nigeria’s financial markets, with implications for borrowing costs and investment flows.
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