Money market rates closed the week at double digits following sustained liquidity pressures in the financial system as the monetary authority skipped Primary Market Auction (PMA) sales.
Tight liquidity in the financial system has kept short-term rates in the double-digit band for the most part of the second half of 2022.
In the just concluded week, the Central Bank of Nigeria (CBN) failed to refinance its N25 billion Open Market Operations (OMO) bills that matured.
This helped the financial system’s liquidity position trend a bit higher; in addition to the N5.63 billion FGN Bonds coupon payment that hit the system. However, the combination of these inflows proved insufficient to impact money market rates which expanded, albeit moderately, when compared with previous data.
The overnight lending rate expanded by 38 basis points to 13.0 on Friday, according to data from the FMDQ Exchange platform.
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The average system liquidity settled higher, printing a net long position of N146.41 billion from a net long position of N24.11 billion in the previous week, according to analysts at Cordros Capital.
“Barring any significant inflow to the financial system coupled with expected outflows for Treasury bills, OMO and FX auctions next week, we expect the overnight rate to trend upward from current levels”.
The Nigerian interbank offered rate, NIBOR, rose as banks demand higher rates to part with their free cash with the 3-month and 6-month tenor buckets, rising to 15.50 per cent (from 15.16%) and 16.13 per cent (from 15.86%), respectively.
The overnight Funds and the 1-Month tenor bucket, on the other hand, fell to 13.25 per cent (from 13.80%) and 14.25 per cent (from 14.60%), respectively.
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