Excess liquidity in the banking system continued to shape money market dynamics this week, driving down short-term benchmark interest rates despite muted activity.
Analysts noted that interbank borrowing costs remained relatively lower, reflecting the system’s surplus liquidity. The Central Bank of Nigeria (CBN), however, did not conduct open market operations (OMO) as expected, allowing excess funds to persist.
AIICO Capital Limited, citing CBN data, reported that system liquidity stood at ₦1.875 trillion on Tuesday, down from over ₦1.961 trillion the previous day. This has prompted increased sterilisation of funds by banks through the CBN’s Standing Deposit Facility.
As a result, the Nigerian Interbank Borrowing Rate (NIBOR) fell across all maturities. The Overnight (O/N) rate declined by 14 basis points to 26.81%, while 3-month, 6-month, and 12-month NIBOR dropped by 2, 2, and 8 basis points, respectively, according to Cowry Asset Limited.
The movement was further supported by inflows from ₦600 billion OMO maturities this week. Money market rates displayed mixed trends, with the O/N rate dipping 3 basis points to 26.92% and the Open Repo Rate (OPR) holding flat at 26.50%.
Meanwhile, the Nigerian Interbank Treasury Bills True Yield posted a varied performance. Yields on the 1-month and 3-month tenors rose by 3 and 13 basis points, respectively, lifting the average NT-Bills yield by 4 basis points to 18.75%. This indicates lingering weak sentiment in the secondary market.
