March 26, 20250
The short term benchmark interest rates in the money market declined due to strong inflows that reduce liquidity pressures in the banking system.
Hence, the Nigerian Interbank Offered Rate declined across all tenors as a results of improved funding profile that forced local deposit money banks to scale back on borrowings.
FMDQ securities data platform cited by investment firms showed that key money market indicators trended downward, with the Open Repo Rate falling by 4.92% to 28.50% and the Overnight Lending Rate decreasing by 4.50% to 28.33%.
TrustBanc Financial Group Limited reported that the deficit in the financial system decreased by 94% to ₦56.83 billion, as withdrawals by Deposit Money Banks (DMBs) from the CBN’s Standing Lending Facility window dropped to ₦486.23 billion, from ₦1.71 trillion.
Throughout February, the interbank market faced persistent liquidity challenges driven by significant outflows from OMO and FGN bond settlements.
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It began with a liquidity shortfall following a ₦1 trillion OMO auction and CRR deductions, pushing the Overnight Policy Rate (OPR) and Overnight Rate (OVN) above 32%.
The rates fluctuates as the Central Bank of Nigeria, CBN, continue to mop up liquidity in an effort to combat inflation. The month of February headline inflation dropped but interest rate benchmark remained up price to keep foreign portfolio investors glued in the local economy.
Banks demand for government securities have been on the rise amidst rising credit default due to tight economic conditions thereby affecting Money market accounts return following a shift in market dynamics.
