Money market rates trend downward as system liquidity expands

Money market rates, Open Buy Back (OBB) and Overnight (OVN), trended lower Week on Week (W-o-W) on the back of changes in system liquidity following Open Market Operation (OMO) repayments/ sales and primary market auctions. Despite a reduction in system liquidity which fell by N55.7 billion to N331.3 billion from N387.0 billion in the previous session following an Open Market Operation auction of N37.1 billion, OBB and OVN rates trended southwards on the opening trading day of the weekdeclining by 13.5 percentage points and 15.3 percentage points to 3.7 per cent and 4.4 per cent respectively from 17.2 per cent and 19.7 per cent reported in the preceding week. However, the increase in system liquidity in Thursday to N1.2 trillion following OMO and T-bills repayments worth N529.1 billion off set the impact of primary market sale of N49.6 billion on the day. But OBB and Overnight rates increased 1.1 percentage points and 1.2 percentage points to close at 2.8 per cent and 3.7 per cent respectively. The CBN also issued OMO securities, with the 112-day instrument Offering N150.0 billion, recording Sale of N328.7 million. Under 231- day instrument, CBN Offered N650.0 billion while N560.9 billion sold at issue rates of 11.1 per cent and 12.2 per cent respectively. Similarly, on Friday, another OMO auction was carried out with the 111-day instrument with Offer of N50.0 billion and, Sales of N9.3 billion. The OMO was issued at a rate of 11.1 per cent. Hence OBB and OVN closed the week at 3.3 per cent and 4.4 per cent, dropping by 13.8 percentage points and 15.3 percentage points W-o-W respectively. It is expected that this coming week, OMO maturities worth N216.0 billion will hit the system. But money market operators were optimistic that the CBN will continue with its liquidity mopup through OMO sales while money market rates are expected to trade within a similar band