Interbank rates jump to 23.5 percent as liquidity dries up

INTER BANK RATES JUMPED TO 23.5 percent last week following outflows from the cash reserve ratio (CRR) and open market operations (OMO) auction debits which outweighed the inflows from OMO maturities and retail forex refunds.

Specifically, the CRR and OMO auction debits stood at N100 billion while inflows from OMO maturities was N33 billion.

This week, another tranche of N16 billion OMO maturities will come in to improve systemic liquidity and contract the inter bank rates.

In the Treasury bills secondary market, trading remained at moderate levels following pressured system liquidity, low rates and shift in focus to the primary markets of both segments.

However, the average yield across all instruments pared by two basis points to 4.2 percent. Across the segments, average yield expanded by 14 basis points to 5.2 percent at the OMO segment as activity in the space remained frail; yields contracted by 15bps to 2.1 percent, on average, at the NTB segment, as market participants covered for lost bids at the PMA.

At the PMA, demand remained heavy, as there was an oversubscription of 3.7 times for the NGN88.86 billion worth of bills on offer. The auction closed with the CBN rolling over NGN10 billion of the 91-day, NGN20.00 billion of the 182-day and NGN58.86 billion of the 364-day - at respective stop rates of 1.79% (previously 1.80%), 1.91% (previously 2.04%), and 3.39% (previously 3.75%). At the OMO auction, stop rates were unchanged as the CBN mopped up NGN100 billion of maturating bills across all tenors.

Two weeks ago, trading in the Treasury bills secondary market was sluggish last week as strained system liquidity conditions and unattractive yields hampered demand for instruments.

Because of this situation, the average yield across all instruments expanded by 17bps to 4.2 percent. Across the segments, yields widened at both the OMO and NTB markets, by 18bps and 7bps to 5.0 percent and 2.2 percent, respectively.

Then, at the NTB segment, most of the activity took place at the primary market, as the CBN rolled over instruments worth NGN88.86 billion via auction.