After the cash crunch in January and February, Nigerians’ distrust in the deposit money banks has led to huge withdrawals. According to data from the CBN, demand deposits dropped by N210bn from N20.12trn in January 2023 to N19.91trn in March. The large withdrawals have reduced funds available in banks, making interbank rates high, hovering around 18% and 19%. The liquidity crunch in banks affected the fixed-income market as buy-interest waned and investors sold off aggressively. Analysts believe the large withdrawals will likely persist till the new deadline of 31st December as people try to prevent a reoccurrence of the earlier cash crunch. This outcome signals a bearish outcome for the fixed-income market for the rest of the year.
