The liquidity in the Nigerian money market surged by 62.3 per cent to N2.2tn last week, Afrinvest reports.

The investment firm attributed the liquidity boost to banks tapping into funds, which increased by 76.4 per cent week-on-week.

Despite the surge, the open repo rate remained constant at 32.4 per cent, while the overnight rate dropped by 10 basis points to 32.9 per cent.

Afrinvest reported that at the recent primary market auction for treasury bills, the Central Bank of Nigeria offered N800bn worth of instruments across three tenors: 91-day, 182-day, and 364-day. However, investor demand declined as the bid-to-offer ratio fell to 1.1 times from 2.3 times in the previous auction.

“The 364-day instrument attracted the highest level of buying interest with a bid-to-cover ratio of 1.9 times, while the 91-day and 182-day bills recorded bid-to-cover ratios of 1.0 times and 1.1 times, respectively,” Afrinvest stated.

Compared to the previous auction, the stop rates on the 91-day, 182-day, and 364-day instruments rose by 100 basis points, 70 basis points, and 150 basis points, respectively, settling at 18.0 per cent, 18.5 per cent, and 19.9 per cent.

Afrinvest further noted that bearish sentiment from the prior week was reversed in the secondary market, as the average yield across all tenors declined by 40 basis points week-on-week to 19.4 per cent.

“The mid- and long-dated papers recorded price appreciation as average yields dipped by 16 basis points and nine basis points, respectively, closing at 19.0 per cent and 21.6 per cent.

However, the short-dated instruments faced sell pressure, leading to an average yield increase of 13 basis points to 17.6 per cent,” the report stated.

Looking ahead, Afrinvest projected that market sentiment in the coming week would be shaped by a treasury bill maturity of N1.2tn and the issuance of new primary market instruments worth N700bn.