Interbank rates eased despite a huge liquidity deficit in the banking system totalling more than N1 trillion. The financial system has maintained a negative liquidity profile in the money market in the last five days in the absence of significant inflows.

Hence, banks borrowing from the Central Bank of Nigeria (CBN) Standing Lending Facility (SLF) has persisted ahead of the monetary policy meeting scheduled for Feb 19 and 20, 2025.

On Tuesday, interbank liquidity deteriorated further, deepening into negative territory, which underscores the persistent illiquidity in the financial system. Nonetheless, interbank rates experienced a marginal decline on the day as the inflow of N10 billion OMO repayment moderated funding pressures.

In the money market, the Nigerian Interbank Offered Rate (NIBOR) declined across most tenors, except for the 6-month NIBOR, which increased by 0.02% to 28.80%.

Data obtained from the FMDQ platform showed that key money market indicators decreased, with the Open Repo Rate (OPR) and the Overnight Lending Rate each dropping by 0.10% to 32.35% and 32.70%, respectively.

Banking system liquidity tightened further, up by 32% to N1.06 trillion from N805.4 billion the previous day.

Analysts expect funding rates to remain around current levels in the absence of significant inflows to boost liquidity levels in the banking system.