Deposits into the Standing Deposit Facility (SDF) continued in high volumes this week as the financial market remains awash with liquidity with balances at N539.5 billion on Monday.
Data from a research investment firm, Afrinvest showed that money market rates (Open Buy Back – OBB and Overnight – O/N) settled at 0.7 per cent, 1.1 per cent and 8 per cent for the OBB, O/N and average NIBOR respectively.
However, after two-month halt in liquidity mop-ups by the Central Bank of Nigeria (CBN), it sold N47.7 billion worth of OMO bills last week.
The data stated that the mop-up did not significantly impact on market liquidity as FAAC allocation worth N221 billion hit the system. Consequently, the rise in OBB and O/N rates were marginal as both rates closed at 0.7 per cent and 1 per cent respectively.
On Thursday, however, with the same roll-over value, there was a Treasury Bills (T-Bills) maturity worth N129.2 billion. As T-Bills roll over settlement were yet to be extracted from the market, liquidity balance was N1 trillion on Friday. Consequently, OBB, O/N and average NIBOR closed lower W-o-W at 0.6 per cent, 1 per cent and 8.8 per cent from 0.8 per cent, 1 per cent and 8.3 per cent respectively.
Meanwhile, with the banking system credit hovering around N 1.2 trillion on Friday, up from N571 billion week before last, dealers are expectant of renewed aggressive mop-up of excess liquidity by the financial system regulator, which could translate to rising rates this week.
“Since the central bank has shown willingness to resume issuance of OMO bills, we expect an aggressive mopping up of liquidity next (this) week to further reduce excess cash in the system,” one trader said.
Nigeria’s overnight lending rate remained flat at 1 per cent for a third consecutive week on Friday, as money market liquidity rose to over N1 trillion ($5.05 billion) after budgetary disbursal to government agencies, traders said.
Nigeria, Africa’s biggest economy, disburses revenue from crude exports among its three tiers of government – federal, states and local – on a monthly basis and a portion of state and local government funds passes through the banking system.
Dealers said over N221 billion belonging to state and local governments hit the banking system last week, even as market liquidity was also boosted by central bank’s refunds on Friday of about N400 billion cash set aside by banks to buy dollars.
The secured open buy-back (OBB) – the rate at which lenders can borrow from the interbank market using treasury bills as collateral – closed at 0.5 per cent, far below the central bank’s benchmark rate.
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