Nigerian Deposit Money banks accessed more than N9 trillion to fund operations as the liquidity shortage bit last week.
The financial system came under liquidity pressures in the absence of significant inflows and soaring outflows.
The market had a sequence of outflows that brought the liquidity balance down, beginning with a massive open market operation (OMO bills auction) early in March and Treasury bills offers debits.
As a result, money market rates have remained elevated while the banking deficit hit about N2 trillion on Friday due to the absence of significant inflows to ease the prolonged liquidity crunch.
Liquidity shortage has impacted market dynamics as cash-rich banks demand higher rates on free funds. Hence, the Nigerian interbank borrowing rate rose, albeit marginally, by 0.07 percentage points to close at 32.90%, reflecting the persistent thinning of system liquidity.
At the beginning of the just-concluded week, there was a slight improvement in liquidity balance, but as the week progressed, a huge deficit in the financial system drove interbank rates higher.
