Short-term rates mixed as banks’ borrowing from CBN jumps to N186.3bn
Short-term benchmark interest rates moved in different directions on Monday as deposit money banks sharply increased borrowing from the Central Bank of Nigeria’s (CBN) standing lending facility to cover liquidity shortfalls.
AIICO Capital Limited reported that system liquidity, though still positive, moderated after balances dropped by N436.38 billion, prompting banks to raise borrowings from the CBN window to N186.3 billion from N25 billion previously.
The tighter liquidity came after the apex bank mopped up N2.3 trillion through OMO and Treasury bills sales the previous week.
Despite the liquidity squeeze, funding costs eased slightly, with the Overnight Policy Rate (OPR) dipping 8 basis points to 26.42 per cent, while the Overnight (O/N) rate was unchanged at 27.00 per cent. Analysts expect short-term rates to remain broadly stable unless significant funding activity occurs.
Interbank rates (NIBOR) rose across major tenors, with the overnight, 1-month, 3-month, and 6-month rates increasing by 5 bps, 11 bps, 9 bps, and 5 bps, respectively, according to Cowry Asset Limited.
The Nigerian Interbank Treasury Bills True Yield (NITTY) curve also advanced, as average secondary market yields rose 3 bps to 17.88 per cent amid strong investor demand.
