Overnight Rate Jumps to 32.25% on Squeeze in System Liquidity

By Modupe Gbadeyanka

The overnight rate on Tuesday increased to 32.25 percent from 25 percent in the previous session, while the Open Buy Back (OBB) rate appreciated to 30 percent yesterday from 22.50 percent two days ago.

This came on the backdrop of the squeeze in system liquidity from the OMO and wholesale forex sales in the previous session.

The rates are expected to remain elevated as there are no significant inflows expected into the system tomorrow and also with system liquidity currently estimated at N45 billion.

Meanwhile, the treasury bills market traded on a slightly bearish note yesterday with yields ticking higher by 0.05 percent on average due to the relatively tight liquidity in the market.

According to analysts at Zedcrest Research, market players cherry-picked on some high yielding bills including the JUN 21 and SEP 20 bills which are the next 91 and 182-day bills to be issued today.

It was also observed that the CBN did not conduct an OMO auction yesterday and it is not expected to do so until tomorrow, when there are expectations of inflows from maturing OMO bills.

“We expect the market to be relatively calm today as market players are expected to shift focus to the primary market auction.

“We might however witness slight bullish sentiments due to the expected OMO maturity inflows on Thursday,” Zedcrest Research analysts said.