Overnight inter-bank rates rise to 66.8%

Overnight inter-bank rates, which are the interest rates that deposit money banks use in borrowing and lending to each other, on Monday, rose to 66.8 percent from 27.16 percent on Friday last week, representing 39.63 percent increase.

Also, the 1 month, 3 months and 6 months of the Nigerian Inter-Bank Offered Rates (NIBOR) increased to 15.98, 16.98 and 18.03 percent, respectively, from 15.52, 16.80, and 17.68 percent, respectively, on Friday last week, according to data obtained from the Financial Markets Dealers Quotations (FMDQ).

The Central Bank of Nigeria’s (CBN) single treasury account operations, Cash Reserve Requirement (CRR) maintenance on fortnightly basis, in addition to liquidity outflows to cover treasury bills and foreign exchange transactions weighed on the market, a report by Ecobank stated.

Analysts had expected inter-bank rates to rise this week in the absence of treasury bills maturity and a DMO auction of N70.0 billion bonds. Afrinvest analyst expect liquidity to tighten this week hence pressure rates higher.

Naira on the other hand remained stable at N199.15 at the inter-bank foreign exchange market.
According to Ecobank report, the inter-bank secured lending (Open Buy Back) rose to 78.33 percent from 27.17 percent on April 10.

The CBN’s tightening stance remains active, and was further reinforced by the MPC’s decision to hold unchanged the MPR at 13.0 percent, and other monetary indicators, with the possibility of other administrative measures to support the naira.

The market liquidity is up and above NGN150 billion, but the outlook doesn’t support CBN’s liquidity management via OMO bills.