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Interbank rates fall on budget disbursals

By on March 26, 2011

INTERBANK lending rates eased to 9.25 percent on average last week from 9.83 percent the previous week after the disbursal of part of monthly budgetary allocations to government agencies, traders said last Friday.

The secured Open Buy Back (OBB) closed flat at 8.50 percent, 200 basis points above the Central Bank of Nigeria�s 6.50 percent benchmark rate and 4.5 percentage points higher than the Standing Deposit Facility (SDF) rate.

Overnight placement dropped to 9.25 percent from 10 percent, while call money fell to 10 percent from 11 percent last week.

“The injection of about N224 billion ($1.44 billion) into the system on Wednesday from February budgetary allocations forced down the cost of funds in the market,” one dealer said.

Dealers said the market opened with a balance of about N293.31billion in banks� accounts with the central bank, but the debiting for bonds and foreign exchange purchases was expected to have reduced the balance at the close of market.

Nigeria sold N60 billion in 3- and 5-year bonds this week and $800 million at the bi-weekly foreign exchange auction.

Traders said the rates should climb back next week.

“We are not expecting the market to remain liquid next week because of outflows to treasury bills and foreign exchange sales and this should lead to a spike in rates,” another dealer said.

The 7-day fund at the Nigeria Inter Bank Offer Rate (NIBOR) fell to 9.83 percent from 9.91 percent, 30-day eased to 11.04 percent from 11.37 percent, 60-day traded at 11.79 percent from 12.08 percent, while the 90-day dropped to 12.62 percent from 12.66 percent last week.

Source : Daily Champion