Nigerian Interbank Rates Decline as Liquidity Rebounds After OMO Settlement
Nigeria’s interbank rates have reset following a significant rebound in the financial system’s liquidity. This comes after an initial deficit caused by a major open market operation (OMO) bills settlement.
The system’s funding profile had been plunged into a deficit after OMO settlements totaling ₦2.12 trillion. This led to a period of heightened borrowing activities by deposit money banks. However, liquidity has since recovered, reaching an opening surplus of ₦229.4 billion despite the settlement of a ₦173.25 billion Treasury bills auction. While there were no substantial new inflows, banks’ own activities were sufficient to bolster the financial system’s liquidity.
According to data from the FMDQ platform, short-term benchmark interest rates remain relatively stable, indicating a lack of significant pressure in the money market. A report from Cowry Asset Limited confirmed that interbank rates (NIBOR) fell across key tenors. The overnight, 1-month, 3-month, and 6-month rates saw declines of 13 bps, 42 bps, 53 bps, and 57 bps, respectively.
The money market showed a mixed trend, with the Open Repo Rate (OPR) holding steady at 26.60% while the overnight lending rate ticked up slightly by 2 bps to 27.02%.
In the secondary market, the Nigerian Interbank Treasury Bills True Yield curve registered yield advances across all maturities, driven by broad bearish sentiment. Consequently, the average yield on treasury bills climbed by 7 bps to 17.85%, reflecting increased investor sell-offs. Rates are expected to remain near current levels unless a significant funding activity takes place.
