Interbank market liquidity opened the last trading session of the week positively, standing at N132.92 billion. This marked a significant turnaround after a prolonged period of negative liquidity levels due to the Nigeria Treasury Bills (NTB) auction debit.
The improved liquidity was attributed to the early Federation Account Allocation Committee (FAAC( inflow into the system. Consequently, on a week-over-week basis, the Open Buy Back (OBB) rate decreased by 432 bps to 25.63 percent, and the Overnight (O/N) rate fell by 440 bps to 26.25 percent.
The improvement in liquidity is coming after a prolonged period of illiquidity in the market.
The earlier tightened system liquidity led to increased demand for funding among banks, Cowry Asset Management Limited said in a note.
The investment firm attributes the increase in rates to efforts by the CBN to mop up excess liquidity through Open Market Operations (OMO) and Nigerian Treasury Bills (NT-bills) auctions, resulting in rising yields.
Analysts explained that the tightened system liquidity led to increased demand for funding among banks. At the close of business, short-term benchmark interest rates climbed, signalling there is pressure in the money markets.
The interbank rates—the open report and overnight lending rates expanded by 58 and 111 basis points to close at 30.08 percent and 31.57 percent, respectively, data from the FMDQ platform cited by market analysts showed.
This signalled the CBN’s efforts to maintain rates within the upper band of the Monetary Policy Rate, according to Cowry Asset Limited.
The federation account allocation committee (FAAC) says the three tiers of government shared N1.14 trillion for May.
According to the communique, the N1.14 trillion total revenue comprised statutory revenue of N157 billion, and value-added tax (VAT) revenue of N463 billion.
The revenue also includes electronic money transfer levy (EMTL) revenue of N15 billion and exchange difference revenue of N507 billion.
FAAC said a total revenue of N2.32 trillion was available in May.
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