Short-term benchmark interest rates moved in different directions on Tuesday as liquidity in the financial system fluctuated following an open market operation (OMO) by the Central Bank of Nigeria (CBN).
The open repo rate closed unchanged, setting the floor for money market indicators, as borrowing by banks at the CBN’s standing lending facility slowed sharply. By contrast, the overnight lending rate ticked higher, reflecting mild funding pressure from a mix of inflows from matured OMO bills and settlement obligations for a fresh CBN auction.
Liquidity was further shaped by the Debt Management Office’s (DMO) settlement of FGN bonds from Monday’s auction, even as the system was boosted by a ₦758 billion inflow from maturing OMO bills.
To mop up excess liquidity, the CBN offered a ₦400 billion short-dated OMO auction, which attracted strong investor interest with ₦710.96 billion in subscriptions. The apex bank eventually allotted ₦349.46 billion.
Despite the auction settlement, interbank rates held firm. According to AIICO Capital Limited, the open repo rate remained steady at 26.50%, while the overnight rate inched up by 4 basis points to 26.96%. Analysts expect rates to hover around 26.5% on Wednesday unless significant funding pressures emerge.
Meanwhile, the Nigerian Interbank Treasury Bills True Yield (NITTY) curve advanced across all maturities, with yields on the 1-month, 3-month, 6-month, and 12-month papers rising by 5 bps, 19 bps, 25 bps, and 9 bps, respectively.
