Liquidity levels in Nigeria’s financial system received a significant boost following a substantial coupon payment from Federal Government bonds, prompting a sharp drop in interbank lending rates.
This shift reversed the recent trend of rising rates, which had previously climbed close to 29% amid limited liquidity inflows. Market operators noted a noticeable reduction in withdrawals from the Central Bank of Nigeria’s (CBN) standing deposit facility this week, signaling improved liquidity conditions.
Contributing to this development, the CBN continued its practice of debiting banks in connection with dollar sales related to its foreign exchange interventions. However, the absence of fresh primary market activities limited additional liquidity pressures.
On Thursday, system liquidity was bolstered by approximately ₦175 billion in bond coupon disbursements and supplementary inflows from the apex bank, causing interbank rates to slide to around 26.5%.
While the Nigerian Interbank Offered Rate (NIBOR) climbed across all maturity tenors except the overnight tenor, the overnight rate declined to 27.13%, indicating an adjustment in liquidity availability in the money market.
Major short-term interest rates also declined. The Open Buy Back (OBB) rate dropped by 165 basis points to 26.85%, while the Overnight Lending Rate declined by 202 basis points to settle at 27.40%.
Yields on Nigerian Interbank Treasury Bills (NITTY) also trended downward across the maturity curve, though the average Treasury bill yield remained flat at 20.93%, underscoring continued investor demand in the short-term debt market.
