Short-term interest rates in Nigeria’s financial market declined slightly due to an increase in liquidity at the beginning of the week. The availability of funds in the banking system improved, mainly due to the repayment of Open Market Operations (OMO) bills and a bond coupon payment by the Federal Government of Nigeria (FGN), which injected N279.29 billion into the market.
As a result, key interbank lending rates dropped. The Overnight Policy Rate (OPR) fell by 0.33 percentage points to 26.42%, while the Overnight Rate (O/N) declined by 0.50 percentage points to 26.83%. Meanwhile, the Nigerian Interbank Offered Rate (NIBOR) showed mixed movements, with most tenors rising, except for the overnight NIBOR, which dropped by 1.14% to 27.40%.
Similarly, the Nigerian Interbank Treasury Bills True Yield (NITTY) decreased across most maturities, reflecting increased trading activity. In the secondary market, the average yield on Nigerian Treasury bills also declined.
Last week, liquidity in the financial system surged by N684 billion following OMO bill repayments, FGN bond coupon payments, and allocations from the Federation Accounts Allocation Committee (FAAC). This pushed the net opening balance to a surplus of N130.9 billion, according to Erad Partners Limited.
As a result, borrowing costs for banks eased, with the Open Repo Rate and Overnight Lending Rate dropping significantly by 5.58 and 5.42 percentage points, respectively, to 26.75% and 27.33%.
