Liquidity flow Sweeps Market as N4.02tn Surplus Crushes NIBOR

The Nigerian money market activity stayed firmly in positive territory, with liquidity levels comfortably buoyant. Financial system liquidity opened the week with a strong net surplus of N2.12 trillion.

This was supported by elevated activity in the CBN’s Standing Deposit Facility and repayments of about N259 billion from the primary market.

Liquidity was further bolstered by N254.90 billion in OMO bill repayments and over N460 billion in additional primary market repayments, allowing the week to close with an even stronger surplus of N4.02 trillion.

This came despite the passage of CRR debits on a few banks by regulators. The accommodative stance announced at the MPC meeting, which cut the MPR to 27% while lowering the CRR for deposit money banks to 45% and introducing a higher 75% CRR on non-TSA deposits, provided additional tailwinds for liquidity conditions.

Reflecting these dynamics, the Nigerian Interbank Offered Rate (NIBOR) crashed across all maturity gauges as the system absorbed the impact of maturing OMO bills and higher cash balances.

The Overnight NIBOR fell sharply by 2.06 percentage points week-on-week to settle at 24.78%, underpinned by the liquidity boost from CBN crediting of banks in line with the revised CRR framework.

Similarly, the 1-month, 3-month, and 6-month NIBOR rates declined by 158bps, 139bps, and 137bps respectively, closing at 25.83%, 26.79%, and 27.59%.

Benchmark funding rates also reflected ample liquidity, as the OPR and OVN fell to 24.50% and 24.88%, representing declines of 2% and 2.07% week-on-week.

On the other hand, the Nigerian Treasury Bills Market Index (NITTY) presented a mixed performance.

While the 12-month tenor eased by 17bps to 19.10%, shorter and mid-term tenors climbed higher, reflecting investors’ demand for higher yields.

The 1-month, 3-month, and 6-month NITTY rates advanced by 22bps, 64bps, and 108bps respectively