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Interbank rate eases on bond maturity, budget disbursal

By on March 25, 2014

The interbank lending rates fell 8.59 percentage points to an average of 10.41 per cent on Friday, from 19 per cent last week, after a liquidity boost from matured bonds and budget disbursals reached the banking system.

Reuters reported that the Central Bank of Nigeria paid N300bn ($1.82bn) to retire matured bonds on Wednesday, in addition to the disbursal of government budget allocations and cash call payment to joint oil production partners by the Nigerian National Petroleum Corporation.

Dealers said the cash balance that lenders hold at the central bank opened at N527.21bn in surplus on Friday, compared with N158bn a week ago.

“We see rates stable at the present level … but the outcome of the central bank’s policy meeting next week could alter liquidity,” one dealer said.

The CBN is likely to maintain a tight monetary policy at its next interest-rate meeting on Tuesday, to curb liquidity in Africa’s second-biggest economy and support its currency.

Last week, the cost of funds shot up sharply to 19 per cent for overnight placement after Nigerian Deposit Insurance Corporation charged lenders about N100bn for insurance premiums against bank deposits.

The secured Open Buy Back eased to 10.25 per cent, from 18 per cent last week, 1.75 percentage points below the central bank’s benchmark rate of 12 per cent.

The overnight placement and call money fell to 10.50 per cent each on Friday, compared with 19 per cent and 20 per cent, respectively, last week.

 

 

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