N398.31bn Liquidity Surge: Interbank Rates Drop as Signature Bonuses, Remita Inflows Stabilize Market

Samuel Mobolaji

In a notable shift in the Nigerian financial landscape, interbank rates have dipped significantly, thanks to a combination of signature bonuses from oil companies and robust inflows from OMO bill maturities.

This surge in liquidity has effectively maintained stability in the money market, with rates settling around 20 per cent in the absence of funding pressures during the past week.

The increase in system liquidity was largely driven by inflows totaling approximately N300 billion from bond coupon payments and N254.25 billion from OMO repayments, according to AIICO Capital Limited’s market update.

These factors, alongside non-refundable signature bonuses paid by an oil company to the government for oil block development rights, have strengthened the balance in the financial system.

Market analysts noted that this favorable liquidity position has allowed for a marked decrease in funding rates across banks. The Overnight Policy Rate fell by 10.53 per cent to 19.25 per cent, while the Overnight Rate dropped by 10.46 per cent to 19.68 per cent week-on-week.

In contrast, the Nigerian Interbank Offered Rate (NIBOR) saw increases across all maturities except for the overnight rate, which declined, signaling enhanced liquidity within the banking sector.

According to TrustBanc Financial Group, system liquidity ended the week with a surplus of N398.31 billion, despite a slight decrease of about 15 per cent. Average daily liquidity surged by 212 per cent, reaching a surplus balance of N390.7 billion, a stark contrast to the previous week’s average deficit of N435.7 billion.

Analysts anticipate that unless there are significant debits from the Central Bank, such as those associated with FX auction settlements or cash reserve ratio maintenance, rates are likely to remain stable. However, they do expect that the upcoming settlement of the Nigerian Treasury bills auction could reduce liquidity and drive funding rates slightly higher in the new week.