Abundant liquidity in Nigeria’s banking system has maintained short-term benchmark interest rates, such as the open repo rate (OPR) and overnight rate, below 27%, with analysts predicting this trend will continue absent significant funding pressures.
Data from the FMDQ platform showed mixed rate movements after a slight dip in system liquidity, which closed at N1.397 trillion, down N4.66 billion from N1.402 trillion the previous week. The OPR dropped 7 basis points to 26.43%, and the overnight rate fell 6 basis points to 26.89%. Analysts expect rates to remain stable unless major funding demands arise.
Last week, liquidity was bolstered by FAAC disbursements of ₦1.1 trillion, FGN bond coupon payments of ₦113.62 billion, and OMO maturities, though tempered by TSA debits, net OMO settlements, and bond auction outflows. Despite the CBN’s liquidity management efforts through OMO auctions totaling over ₦1.19 trillion, system liquidity rose from ₦739.10 billion to ₦1.40 trillion by Friday.
Funding rates held steady at 26.5% throughout the week, with the OPR declining 2.40% to 26.50% and the overnight rate falling 2.20% to 26.95%. Analysts anticipate that ₦459.60 billion in OMO maturities will further boost liquidity this week, despite an upcoming Treasury bills auction. In the T-bills secondary market, yields rose by 23 basis points to 22.18%, driven by a 50-basis-point increase in Nigerian Treasury Bills yields to 18.88%, while OMO bill yields slightly declined by 3 basis points to 25.49%.
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