Interbank lending rates rose as the CBN implemented liquidity tightening measures to manage excess cash in the financial system.
Interbank rates climbed higher this week as the Central Bank of Nigeria (CBN) intensified liquidity tightening through open market operations (OMO) to curb excess cash in the banking system.
System liquidity opened at N2.0 trillion, down from N3.4 trillion the previous week, supported by N300 billion OMO maturities. However, it declined further to N1.62 trillion as the CBN absorbed liquidity through primary market repayments. Most banks maintained funds at the Standing Deposit Facility (SDF) window, reflecting low credit appetite.
Consequently, the Nigerian Interbank Borrowing Rate (NIBOR) rose 6 bps to 24.92%, while repo and overnight lending rates climbed to 24.54% and 25.07%, respectively.
In contrast, Treasury Bills remained bullish, with average yields dropping 6 bps to 17.39%, while OMO yields surged 105 bps to 21.62% amid mid- to long-tenor selloffs.
Market analysts expect liquidity to stay positive, supported by N378 billion T-bill maturities and FAAC inflows, ahead of the upcoming N650 billion CBN auction.
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