Rates to Fall Amid Anticipated Ease in Liquidity

By Modupe Gbadeyanka

Analysts are forecasting that this trading week will experience ease in financial system liquidity as the Central Bank of Nigeria (CBN) retires OMO bills worth N16.37 billion.

This, according to those at Cowry Asset, should make the interbank interest rates to further contract during the week.

Last week, CBN auctioned Treasury Bills worth N17.61 billion via the primary market and in line with expectations, stop rates for 90-day, 182-day and 364-day bills moderated to 9.6 percent from 10.00 percent, 11.89 percent from 11.95 percent and 12.02 percent from 12.34 percent respectively amid investors’ high demand for short term fixed income securities.

At the exercise conducted on Wednesday, the 90-day, 182-day and 364-day T-bills were oversubscribed by 9.00 percent, 213.20 percent and 1004.17 percent respectively.

The total outflows worth N17.61 billion partly offset the total matured bills worth N107.29 billion,

hence, the financial system was awash with liquidity.

Consequently, NIBOR for 1 month and 3 months moderated to 12.21 percent from 21.22 percent and 12.69 percent from 12.88 percent respectively.

However, NIBOR for overnight funds rate and 6 months tenure buckets rose to 9.79 percent from 5.54 percent and 14.23 percent from 13.69 percent respectively.

Elsewhere, NITTY on one month, 3 months and 6 months maturities rose to 11.03 percent from 10.94 percent, 11.05 percent from 11.02 percent and 12.65 percent from 12.28 percent respectively. However, yield on 12 months maturity fell to 13.67 percent from 13.80 percent.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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