Nigeria’s interbank money market rates stayed elevated as a liquidity shortfall persisted in the banking system, weighed down by the Central Bank of Nigeria’s aggressive liquidity mop-up operations.
The CBN’s open market operations (OMO) and Treasury bill issuances drained significant liquidity, while no fresh inflows from maturing instruments came in to ease pressure on the system.
As a result, commercial banks increasingly tapped the CBN’s standing lending facility after a ₦153 billion debit for foreign exchange intervention further squeezed liquidity. The system opened the week with a ₦95 billion deficit, which analysts expect could worsen until inflows of about ₦1 trillion from OMO and T-bill maturities arrive later this week.
Funding costs remained high, with the Open Repo Rate (OPR) climbing by 30 basis points to 32.40%, while the Overnight Lending Rate (OVN) increased to 32.70%. Analysts believe the rates will remain at double-digit highs in the absence of significant inflows.
Data from last week also showed the overnight rate spiking from 27% to 32.40%, while the OPR rose from 26.50% to 32.10%, underlining the strain caused by tight system liquidity.
Market watchers anticipate that only substantial maturities or fiscal injections could ease current funding pressures.
