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Interbank money market records N403bn net outflow in March – FMDA

By Babajide Komolafe

The Interbank money market recorded net outflow of N403.72bn in March, says Financial Market Dealers Association (FMDA)

The Association, which is the umbrella body of banks’ treasurers, said in its monthly economic and financial report that the market recorded total outflows of N903.05bn from foreign exchange funding of N595bn, – autonomous sources inclusive; Bond auction N60bn  and treasury bills auction of N248.05bn against the total inflows of N499.33bn through Federation Accounts  Allocation Committee (FAAC) funds N244bn, matured bills of N165.33bn, and personnel fund N90bn.

Reviewing develop-ments in the interbank money market during the month, the report said, “Activities in the Inter-bank market were significantly influenced by the twins’ factor of 100 basis points increase in the Monetary Policy Rate (MPR) from 6.50% to 7.50% and the market illiquidity experienced in the month.
“You will recall that the market was thrown into negative position late in the previous month, as a result of huge outflows from foreign exchange funding and further withdrawal by the NNPC.

“This, by extension impacted the market in the first week of the month, as rates recorded upward movement across all the tenors to signal illiquidity in the system.

“The second week marked a significant rise in the rates in the market. It trended upward in an increasing rate, defied pockets of inflows from matured bills up to the third week. In-between the second week, rates recorded a weekly average of 9.8083% for overnight/Call and 10.1167% for 7 days money.

Rates moderated late in the third week as a result of N244.00bn  FAAC funds and N90.0bn personnel cost funds.
Accounted for the sharp upward movement in the inter-bank market rate from the second week through the third and fourth week, with minor moderation in the third week were huge outflows occasioned by foreign exchange funding of $3.805bn (approximately N595.00bn), treasury bills and Bond funding of N248.05bn and N60.00bn respectively.

On a weekly average, rates moved from 8.0521% for Call and 8.9063% for 7 days money in the first week of the month, moderated marginally upward to 9.8083% for Call and 10.1167% for 7 days money in the second week, and subsided late in the third week due to injection of funds – FAAC, Matured bills and personnel cost.

The fourth and the last week of the month marked the twins effect of policy change and illiquidity in the market, as rates went up to average 10.2967% for Call and 10.9000% for 7 days money and Treasury bills in the fourth week and further up to 10.8646% for overnight/Call and 11.4500% in the fifth week.


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