Banks deposits with CBN spike excess liquidity of N7trn

Banks deposit at the Central Bank of Nigeria (CBN) standing deposit facility, has surged further to a huge surplus liquidity level in the financial system. Standing in excess of N7 trillion, the money market has been flooded with free flows of funds in the absence of significant liquidity mop-up action from the CBN. Details released by AIICO Capital Limited showed that the amount in the financial system reached N7.11 trillion as the CBN failed to float an OMO auction during the week. The monetary authority did not rollover expired OMO bills via its open market operations, which has resulted in a sustained increase in funding level. The absence of pressures in the money market has also kept short-term benchmark interest rate lower.
This is also supported by the latest adjustment to the monetary policy rate – with the asymmetric corridor adjusted by half apiece. On Thursday, the market liquidity remained robust at ₦7.11 trillion level, following an inflow from other major credit of ₦576.62 billion. The market also recorded ₦536.66 billion into the standing deposit facility, raising the total placement by deposit money banks with the CBN to ₦6.08 trillion. The money market rates exhibited a mixed trajectory, as the Open Repo Rate (OPR) held steady at 24.50%, while the overnight rate edged down by 4 bps to 24.88%. Interbank rates are expected to remain around the same level, in the absence of any funding activity or OMO auction. The Nigerian Interbank Treasury Bills True Yield (NITTY) curve declined across all maturities, reflecting sustained investor interest in the secondary market, Cowry Asset Limited reported. This moderate level of demand exerted mild downward pressure on yields, causing the average benchmark yield to ease by 3 basis points to settle at 17.90%.