Nigeria interbank rate drops further

Nigerian interbank rates dropped further to 1.15 percent on average from 1.41 percent last week as the full impact of monthly budgetary disbursals to government agencies hit the monetary system, traders said.

Over 270 billion naira in budgetary allocations to state and local governments was released last Thursday.

The secured Open Buy Back (OBB) was flat at 1.10 percent, 10 basis points above the Standing Deposit Facility (SDF) rate and 4.90 percentage points below the central bank’s benchmark rate.

The overnight rate was also stable at 1.15 percent, while the call rate eased to 1.20 percent from 2.0 percent last week.

“The system remained very liquid from the inflows last week and we expect the trend to continue next week because of the anticipated disbursement of the balance on Monday,” one dealer said.

Dealers were unable to access their account balances with the central bank since Thursday because of technical glitches, but noted that the liquidity level remained comfortable.

Debiting of funds for bond purchases on Friday was not expected to affect liquidity in the system, traders said.

Nigeria sold 105 billion naira in 3-year, 5-year and 20-year bonds this week as part of measures to control money supply and help lenders manage their liquidity.

The market closed with a balance of about 331.35 billion naira last Friday due to the budgetary injection, while foreign exchange procurement was the only major outflow from the system in the week, traders said.

Source: Reuters