Nigerian interbank rates ease on budgetary inflows
Nigeria's interbank lending
rates closed at an average of 13.50 percent this week, easing
from 15.50 percent last week, following the release of some of
December's budgetary allocation to government agencies, traders
said on Friday.
The borrowing rate opened the week at 12.25 percent on large
budgetary inflows, but rose back up to Friday's close after the
central bank mopped up liquidity by selling treasury bills.
"A portion of December budget allocations to state and local
governments finally hit the system on Monday, helping to boost
liquidity level and this reflected in the cost of borrowing at
the interbank," one dealer said.
December budgetary allocation were delayed for over two
weeks, causing a liquidity squeeze in the system, pushing up
cost of borrowing in the interbank market last week.
Africa's top crude-oil exporter shares proceeds from oil
sales from a centrally held account every month to its three
tiers of government - federal, states and local - providing
liquidity to the banking system and impacting on lending rates.
The secured Open Buy Back (OBB) eased to 14.0 percent from
15.0 percent last week, 200 basis points above the central
bank's 12.0 percent benchmark rate, and 4.0 percentage points
above the Standing Deposit Facility (SDF) rate.
Overnight placement dropped to 13.50 percent from 15.50
percent, while call money traded at 14.0 percent against 16.0
percent last week.
Market opened on Friday with a cash balance of 225 billion
naira ($1.40 billion) compared with about one billion naira cash
balance a week ago.
"The market is expected to tighten up next week, while
lending rates should climb higher because of the aggressive
liquidity mop-up exercise by the central bank and regular
funding for foreign exchange and treasury bills purchases,"
another dealer said.
Also, Nigeria plans to auction treasury bills worth 149.27
billion naira at its regular debt auction next week, further
exerting pressure on liquidity.
