Liquidity Skyrockets To N898.7billion As Traders Await Decreased Rates

The banking system’s liquidity jumped to N898.7 billion as a result of the refunds to deposit money banks for unfulfilled bids at last week’s foreign exchange auction and an open market operations (OMO) maturity.

The week opened with financial system liquidity at N258.6 billion, down from previous Friday’s opening levels of N306.5 billion.

The Central Bank of Nigeria, CBN, last week, sold a 206-day bill worth N93.18 billion and also retired N129.61 billion of matured OMO bills, leaving the system with more cash.

Liquidity levels had dropped to N160.4 billion on Tuesday as the debit for the successful OMO bids hit the system while Open Buy Back (OBB) and Over Night (ON) rates increased to 4.4 per cent and 4.9 per cent respectively in tandem to liquidity dynamics.

By midweek OBB and ON rates settled at 4.8 per cent and 5.3 per cent respectively as system liquidity rose to N898.7 billion. Traders said that the central bank failed to sell treasury bills at its OMO window twice in the week because commercial lenders were asking for higher returns than the bank was willing to offer.

Analysts at an investment banking firm, Afrinvest, said that they expect rates this week to “gyrate to liquidity dynamics during the week as the Debt Management Office prepares to auction N105 billion worth of bonds at the monthly bonds primary market auction while foreign exchange provision and refunds continue to drive rates.

We expect rates to trade lower next week if the promise of the government to release capital project funding next week is anything to go by,” one dealer said.