Inter-bank rates drop on budget cash inflows

Inter-bank lending rates, last week, eased to an average of 14.33 per cent from N15.83 per cent recorded the previous week, supported by greater liquidity, thanks to inflow of budgetary allocations for wages and government agency running costs.Dealers said that though the Central Bank of Nigeria increased the tempo of its open market operations during the week to mop up excess liquidity in the system, the market remained relatively liquid, helping keep rates low.The Secured Open Buyback rate eased marginally to 13.50 per cent, from 14 per cent last week, representing 1.5 percentage points above the Central Bank of Nigerias 12 per cent benchmark rate and 3.5 percentage points above the standing deposit facility rate.Overnight placement fell to 14.50 per cent from 16.50 per cent last week, while call money fell to 15 percent from 17 percent.Dealers said the market opened with a cash balance of about N97.58bn ($595.25m) on Friday, better than last weeks N18.33bn.Reuters quoted a dealer as saying, We expect the cost of borrowing to trend up next week (this week) if the CBN continues to aggressively mop up liquidity through open market operations.Indicative rates for the Nigeria Inter-bank Offered Rate closed lower, with seven-day funds easing to 15.66 per cent compared with 16.62 per cent last week.Longer rates all fell, with the 30-day funds rate closing at 16.33 per cent, the 60-day at 16.75 per cent, and the 90-day dropped to 17.29 per cent.Meanwhile, the CBN sold N130.23bn ($794.42m) short-dated treasury bills at an auction on Thursday, even as yields on the papers climbed again compared with the trend at the previous auction.The regulator auctioned N37.49bn of 91-day treasury bills at 14.09 per cent, a slight increase from 14 per cent marginal rate at the previous auction on December 9, and sold N45.72bn in 182-day paper at 16.20 per cent compared with 15.95 per cent previously.The CBN sold N47.02bn in 364-day bills at 16.75 per cent against 16.41 per cent marginal rate previously.The total subscription stood at N152.70bn, compared with N194.04bn naira at the previous auction.The naira had fallen against the United States dollar on Wednesday, to its weakest since October 10, as the CBN closed its official foreign exchange window for the year, putting pressure on the inter-bank market dollar supplies.The naira currency eased to N163.30 to the dollar on the inter-bank, its weakest in 10 weeks, from N162.35 the previous day.
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