Interest rates in the interbank market increased as the settlement of OMO bills reduced liquidity in the financial system. This resulted in a significant rise in short-term lending rates, with analysts predicting continued pressure in the coming days.
The Nigerian Interbank Offered Rate (NIBOR) declined across most tenors, except for the overnight lending rate, which rose by 0.17% to 26.96%.
According to data from the FMDQ platform, the open repo rate jumped by 164 basis points to 28.14%. Likewise, the overnight lending rate increased by 152 basis points, reaching 28.50% due to the absence of substantial liquidity inflows.
The liquidity squeeze was mainly caused by the CBN’s OMO auction, which exceeded ₦1.8 trillion. The central bank offered ₦600 billion across two long-term bills, attracting total subscriptions of ₦1.877 trillion, with final allotments amounting to ₦1.677 trillion.
Following the OMO settlements, market rates surged to as high as 32.5% – 33%. With no major liquidity injections expected and the possibility of further CBN cash reserve adjustments, interest rates are likely to remain high, analysts warn.
