By Modupe Gbadeyanka
A boost in liquidity in the financial system last Thursday crashed the money market rates by 4.58 per cent to 15.65 per cent.
Business Post reports that the market witnessed the inflows of liquidity into the system from the refunds made by the Central Bank of Nigeria (CBN).
According to traders at the market, the apex bank made a refund of the excess cash it took away from commercial banks in the previous sessions.
For a few weeks now, the central bank has been making Cash Reserve Ratio (CRR) debits from banks as part of efforts to control liquidity at the market.
In the penultimate week, the CBN levied the lenders about N122 billion before devaluing the local currency to N380 per Dollar from the previous rate of N360 per Dollar.
It has been keenly observed that within four months, the apex bank has made deductions of over N2 trillion from the commercial banks over CRR violations.
Recall that earlier in the year, the apex bank, for the first time in about four years, raised the Cash Reserve Ratio (CRR) for lenders in the country to 27.5 per cent.
RR This inflow consequently put pressure on the money market rates, reducing the overnight interbank lending rate to 16.10 per cent from 21.00 per cent.
Equally, it depressed the Open Buy Back (OBB) rate by 4.80 per cent to 15.20 per cent from the previous rate of 20.00 per cent.
Business Post reports that the next day, the action of the CBN the previous day further put the money market rates under pressure, with the OVN rate losing 2.00 per cent to close at 14.10 per cent, while the OBB rate dropped 1.40 per cent to settle at 13.80 per cent.
This week, rates are anticipated to touch the single-digit region before moving back to double-digits.
