Mixed movement in rates expected on corresponding inflows, outflows

There are high expectations of mixed movements in interbank rates following Treasury Bills maturities, auctions, even as the Federation Account Allocation Committee (FAAC) disbursements are expected to hit the financial system this week.

While some dealers look forward to financial system liquidity ease and resultant decline in interbank rates, others believe that the Open Market Operation (OMO) maturity of N101.2 billion, and the fact that the Central Bank of Nigeria (CBN) may continue with its OMO mop-ups will guide interbank rates to target levels.

This week, it is expected that there will be maturities via primary market worth N88.14 billion viz: 91-day bills worth N26.14 billion and 182-day bills worth N62 billion..

Also, Nigeria plans to raise N193.14 billion ($614 million) worth of treasury bills at an auction on August 30, the central bank said on Wednesday.

The bank will offer N26.14 billion in three-month paper, N62 billion in six-month bill and N105 billion in one-year paper. The auction result will be announced on the same day.

The central bank issues treasury bills twice a month to help the government finance its budget deficit, curb money supply growth and provide avenues for lenders to manage liquidity..

Performance in the treasury bills market was mixed last week. Average T-bills rate across benchmark instruments closed higher in three  of five sessions.

The week started off on a quiet note, as average yield at the end of trade closed 4-basis points (bps) lower to settle at 18.5 per cent while rates further declined 2bps on Tuesday to 18.4per cent.

By Wednesday, average T-bills rates inched a marginal 1bp higher to 18.5 per cent and remained flat on Thursday. Average yield however closed the week at 18.5 per cent, indicating a marginal 4bps hike week-on-week (W-o-W).