Overnight Rate Hits 7-Month High of 73.42% as T-Bills Yields Add 0.75%

By Dipo Olowookere

The money market rates recorded a significant appreciation last Friday, growing to a seven-month high at the close of business.

This occurred as the Central Bank of Nigeria (CBN) intervened in the foreign exchange market via a retail SMIS, consequently taking system liquidity significantly lower into an estimated net negative position of nearly N100 billion.

Specifically, the Open Buy Back (OBB) rate jumped to 65 percent from 16.67 percent, while the overnight rate went up to 73.42 percent from 18.88 percent in the previous session.

Analysts at Zedcrest Research expect the rates to remain elevated this week in anticipation of the CBN intervention in the Wholesale forex SMIS segment today (Monday).

Meanwhile, the average treasury bills yields slightly appreciated last Friday by 0.75 percent as a result of a significant squeeze in system liquidity influenced by the announcement of a Retail SMIS by the CBN..

This forced some banks to sell-off their positions, mostly on the short and medium end of the curve, in a bid to generate liquidity to fund for their bids.

This weakness is expected to persist today as system liquidity is expected to remain depressed in the near term.

At the close of business last Friday, the T-bills market turned significantly bearish and this is expected to remain ahead of the sale of treasury bills worth N33.8 billion by the central bank via the primary market on Wednesday.