Moderation in interbank rates expected on N594.36bn T-Bills maturities

THERE are expectations of a reduction in interbank rates as Treasury Bills (T-bills) worth N594.36 billion mature this week.

Available data show that these maturities via the primary and secondary markets will more  than offset T-bills worth N150.60 billion to be auctioned by the Central Bank of Nigeria (CBN) via the primary market.

The apex bank will conduct the auction viz: 91-day bills worth N22.73 billion, 182-day bills worth N24.80 billion and 364-day bills worth N10.07 billion. Hence, “we expect liquidity ease in the finanical system to be sustained with resultant moderation in interbank rates. Also, we expect stop rates to further increase, given the CBN’s signal to use OMO rates to slowdown foreign portfolio outflows.

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“In the coming week, we expect money market rates to remain within the single digit band as liquidity levels remain robust. Nevertheless, we expect the CBN to sustain its weekly OMO mop ups in the week,” Afrinvest (West) Africa Limited stated.

“The central bank wants to do more indirect tightening,” said Kunle Ezun, an analyst at Ecobank in Lagos, Nigeria’s commercial capital. “They are using OMOs as we move into election time. The monetary policy rate seems to have lost its potency. There is no more liquidity in the MPR.”

Many banks have moved to using three-month T-bills or the interbank market as benchmarks for their lending rates, he said. The movement in naira yields reflects the central bank’s tightening. One-year interbank rates have surged almost 500 basis points since May to 16.87 per cent. That’s above the MPR, which has been kept at 14 per cent since July 2016.