In the money market, pressure on financial system liquidity kept short-term benchmark interest rates high, although banks continued to borrow from the Central Bank of Nigeria.
Due to sluggish inflows from maturing instruments, money market rates rose further, with both overnight and repo rates remaining elevated at 32%.
AIICO Capital Limited said that the financial system’s liquidity increased yesterday, but remained negative, with approximately ₦1.5 trillion exposed to the CBN’s standing lending facility (SLF).
However, statistics from the FMDQ platform indicated that the Open Repo Rate (OPR) rose by 11 basis points to 32.30%, while the Overnight Rate (O/N) remained at 32.68%.
The rates at which banks borrow from peers in the industry increase while the CBN set SLF rate at 31.75% after policy rate adjustment.
High rates on money impacts banks costs of funds, analysts said, noting that liquidity shortage in the financial system is a normal condition that sets rates direction for funds allocation.
The Nigerian interbank offered rate (NIBOR) rose across most maturities. While, the Overnight NIBOR declined, indicating improved liquidity in the banking system for a very short term, Cowry Assets Limited said in a note.
Nigerian Interbank Treasury Bills True Yield (NITTY) experienced upward movement across most maturities, while the average secondary market yield on T-bills rose by 0.43%, settling at 23.54% due to sell-sentiment.
