Nigerian interbank rate fall, liquidity level up

Nigerian interbank rate fall, liquidity level up


Friday January 6, 2012

Nigeria's interbank lending rates dropped further this week to an average of 13.50 percent from 14.08 percent last week as liquidity supported transactions, despite the central bank embarking on an aggressive mop-up.

Dealers said the market opened trading with a cash balance of about 290.64 billion naira ($1.82 billion), compared with a balance of about 168.58 billion naira last Friday.

"Rates were pretty low because of prevalent liquidity in the system and in spite of two sessions of open market operations which soaked some cash from the system," one dealer said.

The secured open buy back (OBB) rate eased to 13 percent from 13.75 percent last week, 100 basis points above the central bank's 12 percent benchmark rate and 3.00 percentage points above the standing deposit facility rate.

Overnight placement fell to 13.50 percent, from 14 percent, last week, while call money dropped to 14 percent, against 14.50 percent.

Traders said the central bank sold about 81 billion naira in treasury bills this week, but its effect was minimal on the cost of borrowing among banks.

"The central bank seems to be aggressive in its efforts to tighten liquidity in the system, so we see rates trending higher next week as liquidity recedes due to treasury bills issuance, foreign exchange purchases and other transactions," another dealer told Reuters.


Source: Reuters (Reporting by Oludare Mayowa)


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