The scarcity of funds in the interbank money market worsened last week, with market liquidity falling by 72 percent to N56.3 billion.
According to a Financial Vanguard analysis of data from the Central Bank of Nigeria, the amount of liquidity (Opening balance) dropped to N56.3 billion on Friday last week from N200.64 billion the week before, a 72 percent week-on-week (w/w) drop.
The sharp drop was exacerbated by significant outflows from the market, including N67.59 billion from the CBN’s Open Market Operations (OMO) Treasury Bills auction on Wednesday and N192.76 billion from the Debt Management Office’s (DMO) FGN Bond auction during the week.
During the week, the outflow mitigated the impact of a N85 billion inflow via matured OMO treasury bills.
As a result, the interbank money market’s cost of funds remained elevated, albeit with a slight decrease from the previous week.
According to data from FMDQ, the interest rate on Collateralised (Open Buy Back, OBB) lending dropped 50 basis points (bpts) to 19% last week, down from 19.5 percent the week before.
Similarly, the overnight lending rate fell 75 basis points to 19.25 percent from 20% the previous week.
Banks’ reliance on the CBN’s Standing Lending Facility for liquidity needs increased by 808 percent last week, as banks borrowed N107.67 billion from the apex bank, up from N11.84 billion the previous week, reflecting the severe lack of funds in the market.
On the other hand, the amount of idle funds deposited by banks into the CBN’s Standing Deposit Facility fell by 74% to N16.25 billion last week, down from N63.11 billion the week before.
Ada Peter
