Interbank rates to move in mixed directions amid marginal inflow of matured OMO bills

In the new week, Treasury bills worth N35 billion will mature via Open Market Operation (OMO); hence, there are expectations that interbank rates will move in mixed directions amid a marginal inflow of matured OMO bills.

Meanwhile, Deposit Money Banks increased their holdings in Nigerian Treasury Bills by N1.55 trillion between July 2021 and June 2022 to stand at N2.28 trillion.

This is contained in the financial market half-year 2022 activity report, released by the Central Bank of Nigeria (CBN).

Commercial banks accounted for 50.5 per cent of the total N4.5 trillion Nigerian treasury bills held as of June 2022, compared to 24.4 per cent recorded as of the corresponding period 2021.

Last year, parastatals accounted for more than half of the total, just as the increase in banks’ exposure to fixed securities is due to rising volatility in other variable assets and incentives to venture into risk-free government securities rather than corporate or variable debt securities.

Records show that DMBs accounted for 50.5 per cent of the total after increasing their holdings from N728.9 billion recorded as of June 2021 to N2.28 trillion at the end of June 2022.

The holdings of merchant banks in Nigerian Treasury Bills as of the review period stood at N29.38 billion, representing 0.7 per cent of the total. It however increased by 109.4 per cent compared to N14.03 billion recorded as of the corresponding period of 2021.

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Parastatals accounted for 26.9 per cent with N1.21 trillion, representing a decline of N354.28 billion from N1.57 trillion recorded as of June 2021 while mandate and internal funds with N988.26 billion as of the end of the first half of 2022 accounted for 21.9 per cent of the total treasury bills holding.

Meanwhile, the treasury bills rate has witnessed a significant increase in recent times on the back of multiple Monetary Policy Rate (MPR) upward adjustments by the CBN. Recall that the Central Bank increased the monetary policy rate to 16.5 per cent in its last policy meeting in a bid to tame the rising rate of inflation in the country.