Financial Market Update: Money Market Rates Decline Amid Liquidity Boost

Money market rates decreased as financial system liquidity levels received a significant boost from Remita and other state inflows.

With reduced funding pressures, banks placed surplus funds with the Central Bank of Nigeria’s (CBN) Standing Deposit Facility.

The banking system ended Tuesday with a substantial liquidity surplus of over N534 billion, which helped stabilise short-term benchmark interest rates.

This improved liquidity position led to a decline in Nigerian Interbank Offered Rate (NIBOR) across all terms. Specifically, the Overnight Policy Rate (OPR) decreased by 9 basis points to 26.58%, while the Overnight Rate (O/N) fell 17 basis points to 27.04%.

According to TrustBanc Financial Group Limited, system liquidity experienced an impressive 84% increase, resulting in a surplus of ₦534.3 billion. This surge primarily stemmed from increased deposits by Deposit Money Banks (DMBS), which placed ₦716.22 billion in the CBN’s Standing Deposit Facility (SDF) window.

Market analysts anticipate that, barring unexpected outflows, liquidity levels should remain stable in the short term, with funding rates likely to maintain their current levels.

The Nigerian Interbank Treasury Bills True Yield (NITTY) showed declines across most tenors in the treasury bills market. The exception was the 3-month tenor, which increased slightly by 0.04% to 19.10%. This pattern reflects positive sentiment in the secondary market for Nigerian Treasury Bills, with strong investor demand driving average yields lower.