Fall in NIBOR anticipated on maturing N20bn worth of OMO bills

There are expectations that activity in the money market would be slightly bullish this week as the financial system liquidity receives a boost by the maturing N20 billion worth of Open Market Operation (OMO) bills hence, dealers anticipate a fall in the Nigeria Interbank Offered Rate (NIBOR) for most tenor buckets.

Also, “In the new week, we expect the value of FGN Bonds to fall (and yields to rise) as investors scramble for short term fixed income securities.

“Nevertheless, we expect investors to demand for Nigerian Eurobonds as yields appear attractive,” dealers from Cowry Assets Management Limited said in a note to clients.

Meanwhile, a herd of market participants have raised the alarm that the continued intervention of the Central Bank of Nigeria (CBN) triggered a liquidity squeeze in the interbank segment of the financial market penultimate week.

For example, they reckon that the interbank market liquidity declined by 57.69 per cent from N78 billion on June 20 to N33 billion the next day.

However, the liquidity rose to N445.0 billion as of Friday due to about N300 billion settlements for inter-bank retail Secondary Market Intervention Sales auction.

The CBN mops up liquidity via Cash Reserves Ratio (CRR) debits, Open Market Operation (OMO) auction and special bills.

OMO means the buying and selling of government security, which enables a central bank to control the supply of money in the banking system.

On June 2, 2022, the CBN mopped up a total of N40 billion via OMO auction.

The Central Bank has been debiting banks for Cash Reserve Requirement (CRR) and the most recent was N102 billion debited at the beginning of the month.