• Saturday, December 09, 2023
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Inter-bank overnight rate rises 21.42% after CBN’s OMO

Inter-bank rates flat on maturing bills, budget flows

The overnight tenor of the Nigeria Inter-Bank Offered Rates (NIBOR) on Monday climbed by 21.42 percent to 37.54 percent from 16.12 percent Friday last week.

This is as a result of liquidity squeeze in the banking system following the Open Market Operation (OMO), which is a tool used in the purchase of securities in the open market by the Central Bank of Nigeria (CBN).

Other tenors also increased, for instance, 1 month tenor rose to 15. 71 percent from 14.78 percent last week Friday, 3 months and 6 months increased from 15.30 percent and 16.55 percent last week Friday to 16.23 percent and 17.23 percent, respectively, according to the data from Financial Markets Dealers Quotations (FMDQ).

Read also: Nigerian international airfares skyrocket as falling naira erodes fuel savings

Kunle Ezun, analysts at Ecobank Nigeria, told BusinessDay on phone last night that there was a mop up of liquidity in the banking system by the CBN via OMO. However, the amount mopped up has not yet been disclosed by the CBN.

Naira on the other hand depreciated by N2.60k or 1.3 percent against the US dollar at the inter-bank market foreign exchange on Monday after a six-week delay to the February 14 presidential election that is stirring concerns about political stability and the central bank’s ability to manage a currency hammered by weak oil prices.

After trading on Monday, the local currency closed at N196.40k/$ as against N193.80k/$ at the inter-bank forex market, data from FMDQ revealed.

At the parallel market, the nation’s currency, naira, weakened by N0.50k/$ against the dollar as the exchange rates closed at N208.50k/$ compared to N208/$ on Friday last week.

Meanwhile, the CBN offered and sold some amount of dollar to some deposit money banks at the rate of N168/$ at the Retail Dutch Auction System (RDAS).

The currency has been officially pegged at N160-N176 to the dollar after an 8 percent devaluation in November but has seldom traded inside that range, fuelling speculation that central bank governor Godwin Emefiele will have to re-rate again.

The central bank’s next policy meetings are on March 23-24, just four days before the rescheduled vote, and then May 18-19, although Emefiele can call an emergency meeting at any time if he wants to, Reuters reports.