Money market rates showed mixed movements as excess liquidity persisted in the financial system. The ample liquidity has stabilized rate fluctuations over the past few weeks, and analysts expect this trend to continue until after the midweek Treasury bill auction.
Analysts predict that liquidity levels could temporarily switch to a deficit after the midweek auction, as payments will be processed within a few hours, unless additional inflows counterbalance these debits.
According to Cowry Asset Limited, the Nigerian interbank offered rate (NIBOR) dropped across all maturities, indicating improved liquidity in the banking system. Data from the FMDQ platform showed that short-term interest rate benchmarks remained below 20% at the close of Monday’s trading session.
Many banks faced minimal funding concerns, a shift from the high rates seen before recent inflows from FAAC, Remita, and FGN coupons boosted liquidity. In late October, rates had surged to nearly 33% due to outflows from the Central Bank of Nigeria’s primary market auction sales and foreign exchange intervention debits.
As of Monday, the banking system opened the week with a robust liquidity balance of ₦375.53 billion, according to TrustBanc Capital Limited. Consequently, the open repo rate dropped by 3 basis points to 19.22%, while the overnight rate edged up slightly by 1 basis point to 19.69%.
“We believe the system will maintain its surplus liquidity, with funding rates holding steady at current levels,” the firm noted. In a similar report, AIICO Capital Limited highlighted that system liquidity remained strong in the absence of major debits.
