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Interbank rates fall, maintain double digit profile


The interbank lending rates moderated at the close of trading last week, but maintained the double-digit profile, which the instruments assumed in the last few weeks.

Before the close of trading on Friday, the monetary authority had mopped up N207.1 billion through the Open Market Operations (OMO), but the move, which pared rates by 3.3 per cent and 2.8 per cent for the (OBB) and Overnight respectively, still left them as high as 13.5 per cent and 15.3 per cent each.

Traders hinted that the situation could be attributed to N200 billion inflows from the Federal Accounts Allocation Committee, which had earlier hit the financial system.

At the beginning of the week, aggregate liquidity level in the system was buoyed by the Federal government bond coupon inflow of over N40 billion, which caused a 10.1 per cent and 8.2 per cent decline in OBB and Overnight rates to 26.2 per cent and 28.8 per cent respectively.

They moderated further to 17.3 per cent and 18.4 per cent respectively on Tuesday and eventually settled at 10.3 per cent and 11.8 per cent by midweek as system liquidity further improved.

However, an OMO mop-up worth N201 billion, coupled with treasury bills auction debits for Wednesday’s primary market auction drove the two rates 6.5 per cent and 6.3 per cent points higher to 16.8 per cent and 18.1 per cent on Thursday.

“Contrary to deficit opening balances throughout the previous week, aggregate system liquidity improved last week, as liquidity levels opened in a surplus position on all trading sessions save for Monday when opening balance stood at a deficit of N123.1 billion,” Afrinvest weekly market report noted.

Despite the development, rates remained high and oscillating between low and higher positions, but generally defying responding disproportionately to the liquidity levels.

Notwithstanding improved system liquidity, activities in the treasury bills (T-Bills) market were largely mixed amid the outcome of the Monetary Policy Committee meeting, as well as primary market issuances.

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