Interbank rate falls on matured T-bills, as stock index rises on bank shares gain

Nigeria’s interbank overnight lending rate fell sharply on Friday to an average of 12 per cent from around 60 per cent a week ago after the central bank repaid matured treasury bills and a refund of excess cash deposited by banks to buy dollars. In the same vein at the Nigerian Stock Exchange the main share index ended up 1.66 per cent at 36,920 points after bargain hunters returned to take positions in Guaranty Trust Bank and Zenith Bank, two top banks shunned early in the week over a disappointing interim dividend payout.

At the capital market GTbank shares rose 6.47 per cent to close at N39.50 while Zenith Bank gained 6.61 per cent to close at N24.53. The central bank sold $100 million at its special intervention auction in the foreign exchange market, which was less than the amount requested by banks, leading to a refund of the excess deposited by banks on Friday.

The regulator also injected about N168 billion in matured open market operation (OMO) treasury bills into the system on Thursday, raising money market liquidity levels. “The interbank rate is seen climbing again next week as the central bank resumes its aggressive liquidity mop up and sustains its intervention in the forex market,” one senior currency trader said.

The overnight lending rate jumped last week to as high as 100 percent intraday after the central bank tightened liquidity to support the naira currency. The regulatory bank has consistently issued OMO treasury bills to reduce excess liquidity in the money market and curb speculation on the local currency. The central bank sold a total of 68.79 billion naira worth of treasury bills on Friday in its bid to further tighten liquidity in the banking system. The bank’s sales on Friday amounted to 65.5 billion naira of 363-day open OMO treasury bills at 18.55 percent, and 3.29 million naira of the 174-day paper at 17.95 percent.

At the capital market the Nigerian stocks closed higher for the second consecutive day, lifted by shares in banking, cement and a consumer goods maker. The index of Nigeria’s top 10 banks gained 3.97 per cent to lift the index. The stock index had dropped to a 16-day low on Wednesday as some investors cashed in profits after recent gains.

The market had rallied for eight consecutive weeks and peaked at a 33-month high last week before profit takers took advantage of the gains. Other gainers include Dangote Cement, which accounts for a third of the market capitalisation. The cement firm was up 2.37 percent to close at 225 naira, FCMB Group rose 5.36 percent, PZ Cussons gained 4.99 percent while energy company Oando rose 3.94 percent.