Interbank rates, or short-term benchmark interest rates, showed divergence as ₦600 billion in inflows from Federal Government of Nigeria (FGN) bond maturities and coupon payments helped reduce the overall banking system deficit.
The Nigerian Interbank Offered Rate (NIBOR) declined across all tenors, signaling improved liquidity in the banking system, although the balance remained in negative territory, according to Cowry Asset Limited.
Despite inflows from FAAC disbursements, FGN bond maturities amounting to ₦562 billion, and coupon payments totaling ₦38 billion, the financial system liquidity remained tight. However, these inflows helped reduce the banking system deficit by 53%, bringing it down to ₦923.56 billion from ₦1.964 trillion at the start of the week, according to AIICO Capital Limited.
Despite the improved liquidity, the Overnight Policy Rate (OPR) and Overnight Rate (O/N) remained elevated, closing at 32.42% and 32.83%, respectively. The open repo (OPR) rate inched up by 2 basis points (bps) to 32.42%, while the overnight lending rate contracted by 7 bps to 32.83%.
Liquidity Outlook
This week, liquidity conditions are expected to improve, driven by anticipated inflows totaling approximately ₦1.78 trillion from the March 25 bond maturity, FAAC disbursements, and the net impact of Nigerian Treasury Bills (NTB) issuance, according to TrustBanc Financial Group Limited.
Last week, system liquidity closed in a deep negative position at -₦1.96 trillion, down from -₦956.02 billion in the previous week, reflecting tight market conditions.
On Friday, the Open Repo Rate (OPR) held steady at 32.40% (+0bps), while the Overnight Rate (O/N) climbed to 32.90% (+10bps) from 32.80% in the prior week.
