Nigerian interbank rates drop on budget cash inflows
Friday December 23, 2011 2:45pm
Nigeria's interbank lending rates have eased this week to an average 14.33 percent from 15.83 percent last week, supported by greater liquidity thanks to inflows of budgetary allocations for wages and government agency running costs, market sources said on Friday.
Dealers said that though the central bank has increased the tempo of its open market operations in the week to mop up excess liquidity in the system, the market remains relatively liquid, helping keep rates low.
The secured open buyback rate eased marginally to 13.50 percent from 14 percent last week, 1.5 percentage points above the central bank's 12 percent benchmark rate and 3.5 percentage points above the standing deposit facility rate.
Overnight placement fell to 14.50 percent from 16.50 percent last week, while call money fell to 15 percent from 17 percent.
Dealers said the market opened with a cash balance of about 97.58 billion naira ($595.25 million) on Friday, better than last week's 18.33 billion naira.
"We expect the cost of borrowing to trend up next week if the central bank continues to aggressively mop up liquidity through (open market operations)," another trader said.
Nigerian central bank sold about 199.47 billion naira worth of short-dated treasury bills through open market operations in the week to reduce the impact of the release of budgetary allocations to government agencies on the economy.
The market will close for a Christmas break and reopen on Wednesday.
Indicative rates for the Nigeria interbank offered rate (NIBOR) closed lower, with seven-day funds easing to 15.66 percent compared with 16.62 percent last week.
Longer rates all fell, with the 30-day funds rate closing at 16.33 percent, the 60-day at 16.75 percent, and the 90-day dropped to 17.29 percent.