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Overnight Rate Jumps to 53% on Absence of OMO Sales

By Dipo Olowookere

Nigeria’s interbank lending rate on Wednesday slightly rose above 53 percent on a day the Central Bank of Nigeria (CBN) released a ‘No-Sale’ OMO result.

Business Post gathered that this was as a result of low bids received by the apex bank from investors yesterday.

The central bank, which had offered N50 billion worth of 99-day and 197-day bills to market players, got only N9.63 billion subscriptions from traders and this came from the 197-day bill.

It was learnt that the low bids followed the tight system liquidity and consequent high funding rates in the market.

Consequently, the treasury bills market closed bearish as investors sold off some of their bills especially on the short end in a bid to generate liquidity for their positions.

Meanwhile, the overnight rate closed at 53.08 percent from 37.42 percent, while the open buy back rate jumped to 53 percent from 35.80 percent on Tuesday.

The sharp rise, according to analysts, occurred following the continued funding pressures witnessed by banks in the market.

System liquidity is estimated to close relatively unchanged from its opening levels at N10 billion positive, as there were no significant outflows from the system.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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