Liquidity in the Nigerian money market experienced a significant increase of 62.3 percent, reaching N2.2 trillion last week, according to a report by Afrinvest.
The investment firm indicated that this rise in liquidity was primarily due to banks accessing funds, which saw a week-on-week increase of 76.4 percent.
Despite this liquidity surge, the open repo rate remained unchanged at 32.4 percent, while the overnight rate decreased by 10 basis points to 32.9 percent.
Afrinvest also highlighted that during the latest primary market auction for treasury bills, the Central Bank of Nigeria made available N800 billion in instruments across three maturities: 91-day, 182-day, and 364-day. However, there was a decline in investor demand, as the bid-to-offer ratio dropped to 1.1 times from 2.3 times in the previous auction.
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In comparison to the last auction, the stop rates for the 91-day, 182-day, and 364-day instruments increased by 100 basis points, 70 basis points, and 150 basis points, respectively, settling at 18.0 percent, 18.5 percent, and 19.9 percent.
Furthermore, Afrinvest observed a reversal of the bearish sentiment from the previous week in the secondary market, with the average yield across all tenors decreasing by 40 basis points week-on-week to 19.4 percent.
However, short-dated instruments experienced selling pressure, resulting in an average yield increase of 13 basis points to 17.6 percent, as noted in the report.
Looking forward, Afrinvest anticipates that market sentiment in the upcoming week will be influenced by a treasury bill maturity of N1.2 trillion and the issuance of new primary market instruments totaling N700 billion.
