Interbank rates jumped on Tuesday as deposit money banks (DMBs) drained liquidity from the financial system, according to market reports. Funding levels fell in the absence of additional inflows from maturing instruments, with no primary market auction held on Wednesday.
System liquidity moderated by ₦151.1 billion to ₦162.8 billion, down from ₦313.9 billion in the previous session, AIICO Capital Limited said in a market note. The drop was driven by a ₦72.5 billion decline in DMB placements at the Central Bank of Nigeria’s (CBN) standing deposit facility, alongside a ₦69.1 billion increase in borrowings from the CBN’s standing lending facility.
The tighter liquidity balance pushed funding costs sharply higher. The repo rate (OPR) rose 228 basis points to 28.70%, while the Overnight (O/N) rate climbed 240 bps to 29.40%.
The Nigerian Interbank Borrowing (NIBOR) rates also advanced across major tenors, with the overnight, 1M, 3M, and 6M rates up by 2 bps, 175 bps, 171 bps, and 157 bps, respectively.
Analysts expect rates to hold near current levels unless significant funding injections occur. Meanwhile, the Nigerian Interbank Treasury Bills True Yield (NITTY) curve declined across most maturities, even as average secondary market yields edged up 2 bps to 17.90% amid mild selling pressure.
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