Interbank lending rates displayed mixed trends as liquidity constraints in the banking sector slightly eased, following a large inflow of funds from Nigerian bond coupon payments earlier in the week.
Previously, the banking system had experienced a liquidity crunch due to outflows related to Open Market Operation (OMO) bill settlements, net Treasury bill transactions, and required cash reserve deductions by the Central Bank of Nigeria (CBN). This liquidity shortfall forced banks to increase their borrowing from the CBN, with total borrowing reaching approximately N5 trillion last week through its standing lending facility.
On Monday, despite an inflow of N56.8 billion from bond coupon payments, short-term borrowing rates remained high, although some variations were observed in different indicators. The Nigerian Interbank Offered Rate (NIBOR) rose across all tenors, signaling that liquidity remained tight. However, the Open Repo Rate (OPR) dipped slightly by 0.06% to 32.26%, while the overnight lending rate increased marginally by 0.04% to 32.79%.
Financial analysts predict that interbank rates will likely remain stable at these levels, even as an expected promissory note maturity is anticipated to provide additional liquidity to the system.
