• Friday, December 08, 2023
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Liquidity stabilises rates at interbank naira market


 In the month of March, the interbank naira market experienced steady liquidity boost which ensured rates stabilised below the Monetary Policy Rate (MPR) of 12 percent for active tenors.

Financial Markets Dealers said while the monetary authority became more strategic in its liquidity management drive, robust liquidity levels in excess of N320 billion in daily net opening cash balances of deposit money banks ensured rates closed the first week at (10.24percent, 10.59 percent and 11.04percent) for call, 7 days and 30 days respectively despite net outflows of N64.63billion from treasury bills (T-Bills) and N59.95billion Wholesale Dutch Auction System (WDAS) debit.

In their financial and economic report for March, Financial Market Dealers noted that rates inched up slightly when compared with the previous week to close the second week at (10.33percent, 10.63 percent and 11.04percent) for call, 7 days and 30 days respectively following moderation in liquidity levels as outflows through N56.07billion foreign exchange (FX) purchases at WDAS window, N60billion NNPC withdrawal and N70billion bond purchase outweighed net inflows of N20.12billion from Open Market Operation (OMO) bills.

“Cost of funds further tilted northward to (10.75percent, 11.13 percent and 11.54percent) for Call, 7 days and 30 days respectively in the third week following strategic liquidity mop-up through N437.63billion special OMO bills and N106.74billion Primary Market Auction (PMA) sales with N108.67billion WDAS debit as net opening cash balance of deposit money banks peaked at N693.78billion on inflows from N283.23billion FAAC fund disbursement and matured treasury bill repayments of N354.61billion”, financial market dealers noted.

They noted further that Nigeria Interbank Offer Rate (NIBOR) closed the month slightly lower in the fourth week at (10.29 percent, 10.54percent, and 10.92percent) for Call, 7 days and 30 days respectively, as liquidity inflows from N354.72billion matured treasury bills minimised the effects of outflows through N308.32billion treasury bills sales and WDAS debits of N89.81billion.

On monthly average, rates depressed by (1.53percent, 1.55 percent and 1.65percent ) for Call, 7 days and 30 days respectively in the month under review compared with the average rates of the preceding month, arising from the persisted liquidity overhang.