Interbank rates showed a mixed trend as the financial system maintained a healthy liquidity surplus, effectively meeting the funding needs of banks and other market participants. According to data from the FMDQ platform, short-term interest rates hovered around 26% on Wednesday, amid minimal funding pressures in the money market.
Borrowing activities by banks at the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF) tapered off, while substantial inflows into the deposit facility were observed.
Consequently, the Nigerian Interbank Offered Rate (NIBOR) declined across all tenors, a reflection of improved liquidity levels in the banking system.
Reports from various investment firms highlighted a surge in interbank liquidity, attributed to recent disbursements from the Federation Account Allocation Committee (FAAC), coupon payments on Federal Government bonds, and significant Remita inflows from the CBN, which partly offset foreign exchange settlement outflows recorded the previous day.
Key indicators in the money market exhibited divergent movements. The open repo (OPR) rate remained unchanged at 26.50%, while the overnight lending rate edged down slightly by 0.08 percentage points, closing at 26.88%.
Yields on the Nigerian Interbank Treasury Bills True Yield also declined across most maturities, reflecting a more cautious investor sentiment. The average yield closed at 21.04%.
The financial system’s solid liquidity position kept interbank rates near the 26.5% level, with both the OPR and overnight rates holding steady at 26.50% and 26.88%, respectively.
Earlier on Tuesday, banking system liquidity had opened on a firm note, rising by 464% to N374.3 billion, bolstered by the injection of N500 billion in FAAC allocations into the system the previous Thursday.
This boost in liquidity led to a substantial drop in interbank funding rates, with the OPR and overnight rates plummeting by approximately 500 basis points, settling at 26.50% and 26.96%, respectively.
Absent any significant outflows in the near term, liquidity levels are projected to remain elevated, keeping interbank rates anchored around current levels.
