Nigerian interbank rates climb on NNPC cash withdrawal
Friday February 10, 2012
Nigeria's interbank lending rates eased to an average of 14.91 percent this week from 13.50 percent last week as liquidity in the market ebbed on cash withdrawals by the state-owned energy company NNPC.
NNPC sells dollars to some lenders on a monthly basis and transfers a portion of the naira proceeds to its account with the central bank. The energy firm sold about $500 million in three tranches to selected banks in the last three weeks, traders said.
Traders said the market opened with a cash balance of about 10 billion naira on Friday, reflecting the level of liquidity squeeze in the market after the large NNPC withdrawal and foreign exchange and treasury bills purchases.
"We expect the cost of borrowing to keep climbing next week as cash outflows to foreign exchange purchases and other transactions will further reduce the liquidity level," one dealer said.
The secured Open Buy Back (OBB) climbed to 14.50 percent from 14.0 percent last week, 250 basis points above the central bank's 12.0 percent benchmark rate, and 4.50 percentage points above the Standing Deposit Facility (SDF) rate.
Overnight placement rose to 15 percent from 13.50 percent, while call money traded at 15.25 percent against 14.0 percent last week.
Nigeria said on Friday it auctioned 149.27 billion naira ($938 million) worth of 91-day, 182-day and 364-day treasury bills this week at lower yields than its last sale.
Dealers also said the central bank's aggressive mopping up of liquidity through the sales of treasury bills on the secondary market helped to drain liquidity in the system and aided the spike in rates.
"The market will remain short next week and rates further climb unless there are additional cash inflows," another dealer said.