Money market rates declined sharply due to robust liquidity level in the financial system on Thursday after the Central Bank of Nigeria (CBN) reopened borrowing door for banks.

The short-term benchmark interest declined to lowest level seen in a long time, which forced market players to part with their excess funds at lower rates.

According to Futureview Financials Limited, system liquidity climbed to N356 billion due to additional inflows into the system.

Analysts at Cowry Asset Limited said in market update that Nigerian interbank offered rate declined by 0.09% to settle at 20.58%.

The investment firm explained that interbank offered rate as local deposit money banks with liquidity sought lower rates on free cash on Thursday in the money market.

According to data from the FMDQ platform, he Open Repo Rate (OPR) decreased by 287 basis points or 2.78% to close the day at 19.86%.

Likewise, the overnight lending rate declined by 271 basis points or 2.71% to 20.69%, due to improved liquidity. “We expect interbank rates to hover at similar levels tomorrow”, AIICO Capital Limited said in a note.

The Central Bank of Nigeria announced during the week it lifted suspension on its Standing Lending Facility for authorised dealers.

The Apex bank said that the suspension was lifted in alignment with the decision taken at the last Monetary Policy Committee meeting which adjusted the upper corridor of the standing facilities to 5.00 percent. from 1.00 per cent around the Monetary Policy Rate.

The CBN also announced an increase in rate at which banks would borrow from the window to 31.75 per cent. The Standing Deposit Facility rate, applicable to deposits made by banks at the CBN, has been increased to 25.75 per cent.