Short-term benchmark interest rates decreased as liquidity in the banking system remained robust following cash reserve ratio (CRR) debits. On Monday, the financial system’s liquidity stood at N476 billion, a level that supported a moderate decline in interbank rates.
Despite the Central Bank of Nigeria’s (CBN) CRR withdrawals reducing system liquidity, money market rates declined. Liquidity balance dropped from N872 billion to N476 billion, recovering from a deficit of N166 billion observed during midweek trading.
Borrowing by banks through the CBN’s standing lending facility slowed due to the absence of significant market activities driving demand for funds. The Nigerian Interbank Offered Rate (NIBOR) fell across all maturities, signaling adequate liquidity in the banking system, according to Cowry Asset Limited.
Data from the FMDQ platform showed that the open repo rate (OPR) decreased by 0.25% to 26.50%, while the overnight lending rate (O/N) also dropped by 0.25% to 27.25%.
AIICO Capital Limited noted that system liquidity opened lower on Monday but remained positive, influenced by a late CRR debit event on Friday. In the absence of significant funding requirements, interbank rates edged slightly lower, with the OPR and O/N rates falling by 25 basis points to 26.50% and 27.00%, respectively.
Analysts anticipate that liquidity levels will remain positive and funding rates will trade at current levels, provided there are no substantial funding obligations.
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