The Financial Market Dealers Association (FMDA) has projected that deposit rates would increase slightly this month as Deposit Money Banks (DMBs) move to attract more deposits given the tight liquidity situation in the market.
The association made this forecast in its monthly economic report for December obtained Monday.
According to the report, the deposit taking and lending rate of DMBs in the month under review mirrored the rates reported in the preceding month.
The report showed that savings figures averaged 2.0408 per cent; while other tenured funds ranged between 3.9917 per cent for overnight to 364 days money.
For lending rates, prime structured loan and normal structured loan stood at monthly average of 18.0 to 22.1563 per cent respectively in December.
“Rates retained their previous values as key policy drivers’ remained the same as that of the previous rates. Deposit rates are expected to move slightly upwards as DMBs moves to attract more deposits given the tight liquidity situation,” it explained.
The report also showed that the rate of return in the Primary Market Auction for Treasury Bills rallied in the month under review with the average rate of the previous month in order to attract sufficient inflow to support the domestic currency and simultaneously mop up excess liquidity in the system.
The report said: “The central bank sold N340.19 billion against N246.03 billion. Subscription in December increased relative to N659 billion in reflecting a 24.7 per cent increase. At the third auction in the month, stop rates averaged 11.77 per cent against 1 per cent last month; 182 days averaged 11.81 per cent relative to 12.74 per cent in September which was traded in two auctions averaged 11.89 per cent when juxtaposed with 12.77 per cent month.
“Available data revealed that an Open Market Operation auction session was conducted in the month to mop excess liquidity created by the maturing bills, consequently.”
It added: “Activities in the two-Way Treasury bills’ Market were further influenced by the relative liquidity in market, as the market witnessed strong demand from offshore investors on the back of attractive real returns and huge external reserve balance that sustained investor’s confidence trading maturities in the secondary market.
“The Nigerian inter-bank Treasury bills’ True Yield fixing rate pattern moved in tandem with the stop rates in the CBN auction window and secondary market.”