Nigeria’s money market rates experienced a sharp decline as liquidity levels in the banking system surged to over ₦3.2 trillion, buoyed by inflows from Open Market Operation (OMO) maturities and the Central Bank of Nigeria’s Standing Deposit Facility (SDF).
Reports indicate that system liquidity rose by more than ₦1.147 trillion to reach ₦3.237 trillion, as the CBN permitted OMO bill repayments without conducting fresh auctions to replace matured securities.
AIICO Capital Limited noted that the interbank market opened stronger, supported by a liquidity boost from ₦855.79 billion in SDF inflows and ₦254.9 billion from OMO maturities.
Impact on Money Market Rates
With the influx of funds, interbank rates moved in mixed directions. According to Cowry Asset Management Limited, short-term lending rates dropped, signaling improved liquidity conditions. Overnight rates fell by 14 basis points, while one-month rates dipped by 8 basis points.
Conversely, six-month rates increased by 25 basis points, while three-month rates remained flat due to limited funding pressure.
The Open Repo Rate (OPR) and Overnight Lending Rate both reflected the liquidity surge. The OPR declined by 100 basis points to 26.50 percent, while the overnight lending rate fell by 103 basis points to 25.92 percent. Analysts linked the movements to the MPC’s decision to cut the Monetary Policy Rate by 50 basis points to 27 percent.
Treasury Bills Market Trends
The Nigerian Treasury Bills (NTB) secondary market mirrored these divergent movements. Short- to medium-term yields climbed significantly, with one-month, three-month, and six-month rates rising by 20 basis points, 30 basis points, and 56 basis points, respectively.
However, the 12-month yield went against the trend, falling by 30 basis points. Overall, the average NTB yield across the market eased by 5 basis points, settling at 18.36 percent. Analysts interpreted the decline as a sign of increasing investor confidence and improved sentiment in the secondary debt market.
Market Outlook
Financial analysts expect interbank rates to continue trading around current levels unless new funding pressures emerge. With the CBN adopting a more accommodative monetary stance, liquidity conditions are projected to remain favorable in the near term.
