Nigeria’s banking system saw a major improvement in liquidity on Tuesday, thanks to inflows from Remita payments, cash reserve refunds, and bond coupon payments. This reduced the need for banks to borrow from the Central Bank’s Standing Lending Facility (SLF).
Interest rates in the interbank market dropped as a result. The open rate fell to 30.54%, while the overnight lending rate decreased to 31%. Analysts expect these rates to remain stable unless there’s a major shift in market conditions.
On Tuesday, the banking system recorded a surplus of ₦219.18 billion, recovering from a six-day deficit. A 42% reduction in SLF borrowing and an inflow of ₦91.09 billion from bond payments were key factors behind the improvement.
With an auction for ₦530 billion worth of Treasury bills scheduled for tomorrow, analysts predict interbank funding rates will stay at similar levels.
