Nigerian inter-bank rates fall on matured T-bill

Nigeria’s inter-bank lending rates fell this week to an average of 14.41 per cent, down from 15.33 per cent last week, as matured Treasury bill funds boosted liquidity and helped ease pressure on the cost of borrowing, traders said. Traders said though the market opened with a negative balance of 42.60 billion naira ($270.37 million) on Thursday but the repayment of about 98 billion naira in matured open market operation (OMO) bills boosted liquidity.
Rates on short-term borrowing on the inter-bank had risen to around 15.5 per cent for overnight at the close of market midweek because of large fund withdrawals by state-owned energy company NNPC.
“The injection of about 98 billion naira into the system from matured OMO bills brought down cost of borrowing among banks today,” one dealer said. NNPC usually sells dollars to banks on a monthly basis and recalls a portion of the naira proceeds to its account with the central bank. The secured Open Buy Back fell to 14.25 percent from 14.75 percent last week, 225 basis points above the central bank’s 12 percent benchmark rate, and 4.25 percentage points above the Standing Deposit Facility rate.
Overnight placement and call money eased to 14.50 percent each from 15.50 percent 15.75 percent respectively last week. “The market will still open at this level next week until we start funding foreign exchange purchases, treasury bills auction and other transaction, which would drain liquidity in the system and push up rate later in the week,” another dealer said.