The money market opened last week on a liquid footing as N2 trillion in FAAC inflows and N350 billion in OMO maturities combined to lift system liquidity to a net positive balance above N1 trillion. With funding conditions eased, interbank rates trended lower across the curve.
The Overnight NIBOR declined by 197bps week-on-week to settle at 26.78%, while the 1-month, 3-month, and 6-month benchmarks all moderated by 178bps, 184bps, and 182bps to 27.39%, 28.16%, and 28.78% respectively.
In the same vein, bench- mark policy rates eased as the OPR and Overnight rates slipped by 240bps and 220bps to close at 26.50% and 26.95%, reflecting the liquidity comfort in the system.
However, activity in the secondary market revealed that investors remained keen on extracting higher returns, which fed into an upward repricing of the NITTY curve across most short- to mid-term tenors. The 1-month NITTY rose by 24bps to 16.37%, while the 3-month and 6-month benchmarks firmed by 95bps and 8bps to 17.68% and 18.45% respectively.
Only the 12-month maturity bucked the trend, sliding by 31bps to 20.43% as investors shifted focus towards the shorter end of the curve. In contrast, the treasury bills market experienced heavy sell-off pressure across short, mid, and long-dated maturities, which drove the average yield significantly higher by 704bps week-on-week to close at 25.49%.
Looking into the coming week, the liquidity relief may prove short-lived as the CBN is expected to actively mop up excess liquidity through auctions and the standing deposit facility window, a move that could tilt market rates higher.
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