Interbank rates saw a decline as signature bonuses—non-refundable payments made by oil companies to the government for commercial rights to develop oil blocks—along with inflows from matured OMO (Open Market Operations) bills, provided a liquidity boost to the financial system.
Money market rates dropped sharply over the past week, settling around 20% amid limited funding pressures in the financial sector, according to AIICO Capital Limited’s recent market report.
Liquidity levels improved significantly, supported by inflows from OMO maturities, Remita, and signature bonuses. Despite debits from the Central Bank’s FX auction settlements and cash reserve ratio maintenance, overall market balance remained sufficient to keep money market rate fluctuations in check.
This liquidity uptick led to a noticeable drop in funding rates, with the Overnight Policy Rate falling by 10.53% to 19.25% and the Overnight Rate by 10.46% to 19.68% week-on-week.
However, the Nigerian Interbank Offered Rate (NIBOR) rose across most maturities, with the exception of the overnight NIBOR, which declined—a sign of stronger liquidity in the banking sector, Cowry Asset Limited observed.
Analysts expect current rates to hold steady, supported by continued system liquidity unless significant debits from the Central Bank impact the balance.
According to TrustBanc Financial Group, system liquidity dropped by roughly 15%, finishing the week with a surplus of ₦398.31 billion. The liquidity boost was driven by bond coupon payments of about ₦300 billion and OMO repayments totaling ₦254.25 billion.
Analysts also noted that average daily liquidity rose by 212%, ending the week with a surplus balance of ₦390.7 billion, contrasting sharply with the previous week’s daily deficit of ₦435.7 billion.
Looking ahead, analysts predict that the Nigerian Treasury bills auction settlement could reduce available liquidity and push funding rates slightly higher in the coming week.
