Federal Account Allocation Committee (FAAC) disbursement into the Financial system boosted the liquidity level in the Financial system.
The system was boosted by about ₦600 billion FAAC credits, FGN bond coupon payments worth ₦29.84 billion and OMO bill maturities totaling ₦15 billion.
This led to a decline in the Money market short term interest rate benchmark.
The Tier-1 and the lender pumped funds into the Central Bank of Nigeria(CBN) standing deposit facility.
Banks with spare funds are to charge higher rate on their excess cash.
AIICO Capital Limited reported that the liquidity in the system started the week with a surplus balance on Wednesday, mainly due to the early disbursement of FAAC inflows.
“Interbank rates are expected to stay elevated next week, as FGN bond and Nigerian Treasury bills auctions should drain liquidity, in the absence of any significant inflows”. AIICO Capital Limited predicted.
However, analysts noted that financial system liquidity decreased to a negative balance on Thursday because of OMO auction funding amounting to approximately ₦986.88 billion.
Due to flood of inflows into the system, liquidity improved again on Friday ahead of Debt Management Auction scheduled for June 24, 2024.
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