Dear Esteemed Client:
Financial system liquidity levels today opened at ₦441.30bn, compared to 4-day average of ₦51.12bn, on the back of Open Market Operations (OMO) maturity of ₦389.90bn which hit the system. However, unlike the usual pattern of aggressive liquidity mop-up, the Central Bank of Nigeria (CBN) deflected the norm of issuing OMO bills to further tighten, despite the robust system liquidity. Consequently, Open Buy Back (OBB) and Overnight (OVN) rate crashed to single digits of 3.86% and 4.50% relative to the double digit average levels in the last four trading sessions. Over the next 5 weeks till the end of the year, we expect an average of ₦527.00bn maturity, totaling ₦2.64tn, to hit the system on a weekly basis with this impacting on both short term and long term treasury bills and bonds market yields.
Given that the Federal Account Allocation Committee (FACC) met on Wednesday to approve the disbursement for November-2019 allocation, the market awaits the inflow of additional liquidity between tomorrow and next week. Hence, we are of the view that the CBN may consider a possible auction for Friday to keep the financial system less awash of liquidity. Read more