Nigeria’s interbank market recorded mixed rate movements this week as fluctuations in banking system liquidity shaped short-term interest benchmarks. Analysts noted that funding conditions remained broadly positive, with commercial banks maintaining strong participation at the Central Bank of Nigeria (CBN) Standing Deposit Facility (SDF), where excess funds are sterilized despite the relatively low returns.
On the other hand, demand at the Standing Lending Facility (SLF) has significantly slowed. Market observers attributed the decline to the persistent liquidity surplus in the financial system, coupled with the apex bank’s decision to withhold new Open Market Operation (OMO) bills, even after the maturity of earlier issuances injected fresh inflows.
For the tenth consecutive trading session, the SLF window remained inactive, underlining limited borrowing pressure in the market. While the CBN has avoided mopping up liquidity, a marginal shake-up was observed following dollar outflows from the system. The apex bank sold $20.7 million to commercial banks on Tuesday in an attempt to stabilize foreign exchange supply and support the naira, substituting for an expected OMO auction.
Money market rates moved unevenly, with Cowry Asset Limited reporting that the Nigerian Interbank Offered Rate (NIBOR) saw slight changes on Thursday. The overnight rate inched up by 4 basis points to 26.83%, while the Open Repo Rate (OPR) increased by 8 basis points to 26.50%. The overnight lending rate, however, held steady at 26.96%.
In the treasury bills space, yields on Nigerian Interbank Treasury Bills True Yield (NITTY) climbed across all maturities. The 1-month, 3-month, 6-month, and 12-month tenors advanced by 4, 25, 12, and 8 basis points, respectively. Despite these upticks, the average NT-Bills yield slipped by 6 basis points to 18.73%, reflecting sustained investor appetite in the secondary market.
