The prevailing short-term standard interest rates within the financial sector exhibited a divergent pattern, coinciding with the increase in the banking system’s deficit, which reached N1.7 trillion. This escalation adversely impacted the aggregate bids submitted during the Central Bank of Nigeria’s (CBN) scheduled sale.
The levels of interest rates within the monetary market remained elevated, a direct consequence of the absence of substantial fund injections to alleviate the prolonged scarcity of available funds within the banking infrastructure.
During the Treasury bill auction conducted on Wednesday, the total volume of bids, or overall subscriptions, experienced a notable reduction when compared to previous auctions. This occurrence was attributed to the substantial financial shortfall prevalent within the system at that juncture.
It was reported that financial institutions procured in excess of N1.8 trillion to supplement their available liquid assets prior to the commencement of the CBN’s N800 billion auction, during which sales were made available for bidding. It is anticipated that interbank, or money market, interest rates will experience further upward movement, driven by the forecast that the liquidity challenges within the banking framework will persist.
In a published observation, TrustBanc Financial Group Limited indicated that the deficit within the banking structure expanded by 16.82%, initiating at N1.7 trillion, an increase from the previously recorded N1.433 trillion. This extended the sequence of negative balances to a ninth consecutive day.
The Nigerian Interbank Offered Rate (NIBOR) registered a reduction across the majority of its time frames, while the overnight NIBOR remained static, maintaining its range between 0% and 32.79%, according to information provided by Cowry Asset Limited.
Information sourced from the FMDQ platform, as cited by an investment banking entity, revealed that the Open Repo (OPR) rate experienced a decrease of 10 basis points, settling at 32.40%, whereas the Overnight (O/N) rate increased by 2 basis points, concluding at 32.90%.
With the anticipated settlement of a Nigerian Treasury bill auction valued at ₦503.92 billion scheduled for Thursday, analysts have conveyed their expectation of further liquidity pressure, leading to an upward trajectory in interbank interest rates.
