Despite the Central Bank of Nigeria’s liquidity mop-up aimed at addressing excess liquidity, there will be an additional N330 billion inflow for the interbank money market.
The bulk of the liquidity is coming from matured Treasury bills auction, which will be conducted by the CBN.
It is expected that the extra liquidity will help offset the effect of the N33.84 billion outflows through primary market.
The mop-up, embarked by the CBN last week, will be continued, as a response to the troubling excess liquidity in interbank money market – an excess that was further worsened by the inflow of 290 billion.
However, the apex bank moped up N454 billion from the interbank money market through Open Market Operations (OMO) treasury bills.
A financial analysis carried out by a national newspaper showed that there were two OMO bills offered; one worth N50 billion – for a period of 119 days at a stop rate of 11.05%, which had a subscription of just N2.9 billion, and the other worth N200 billion, for a period of 231 days, at a stop rate of 12.15%, had a case of over-subscription. It sold a total of N451.2 billion.
The liquidity mop led to a 6,600 Base points rise in short-term fund cost. This was seen in the sporadic rise in the interest rate of Open Buy Back which shot up by 65% from 2.83% a week before. Same was also seen in overnight lending which also rose by 73.42% on Friday compared to the previous week when it was at 3.33%.
Image Credit: Daily Post
