Amid expectations of inflows to hit the system this week, money market rates started the week lower than Friday’s closing rates. Open Buy Back and Over Night rates dropped 1.0% and 0.9% to settle at 3.5% and 4.1% at the end of Monday’s trading session. OBB and O/N rates dropped further to 3.0% and 3.3% on Tuesday on the back of the inflow from refunds of unfulfilled bids of Deposit Money Banks by the CBN. OBB and O/N rates however trended upwards to 3.3% and 3.8% respectively on Wednesday as a result of the CBN’s mopping up of N56.0bn from the financial system via an OMO auction. On Thursday, as expected, there was an OMO maturity of N96.4bn, OBB and O/N remained at Wednesday’s rates notwithstanding as the CBN also mopped up N49.2bn in OMO auction. OBB and ON settled at 3.1% and 3.7% on Friday, down 1.4% and 1.3% respectively W-o-W.
In the T-bills market, average rates trended similar to OBB and O/N rates. Average T-bills rate opened the week at 7.9% (from 8.6% last Friday), dropping to 7.8% on Tuesday on the back of increased buying interest. By the end of Wednesday’s trading session, average T-bills rate rose 0.1% to 7.9% on the back of the OMO auction floated by the CBN. Average rate rose even further to 8.0% by Thursday as the CBN mopped up another N49.2bn from the system. Average T-bills rate eventually closed the week at 8.2% down 0.4%W-o-W.
Next week, we expect money market rates to trend northwards as we expect the CBN to carry out more OMO mop-ups. There is a net T-bills maturity of N150.6bn expected to hit the system on Thursday, the impact of this on liquidity levels is however expected to be off-set by a rollover of the same net amount.