Interbank rates rise on short cash supply

Nigeria's interbank lending rates rose further this week to an average of 15.25 percent from last week's 14.91 percent as the Nigerian National Petroleum Corporation (NNPC) soaked up available naira.NNPC sells dollars to some lenders regularly and transfers a portion of the naira proceeds to its account with the Central Bank of Nigeria (CBN). The NNPC has sold more than $700 million to some banks in the last few weeks, traders said.Traders said the cost of borrowing could rise further next week if the NNPC continue its cash withdrawals coupled with expected naira outflows into treasury bills and foreign exchange.'Hopefully, respite may come to the market next week if government release a portion of budget allocations to its agencies, otherwise the cost of borrowing will definitely jump further,' one traders said.The secured Open Buy Back (OBB) was unchanged at 14.50 percent, 250 basis points above the central bank's 12.0 percent benchmark rate, and 4.50 percentage points above the Standing Deposit Facility (SDF) rate.Overnight placement rose to 15.50 percent compared with 15 percent, while call money traded at 15.75 percent against 15.25 percent last week.Traders said the market opened with a cash balance of about N65 billion, better than last week's N10 billion balance.Inflows from disbursement from excess crude account to the three tiers of government and cash call payments for joint oil production partners by the government had boosted liquidity early in the week, but this was countered by major outflows to NNPC withdrawals and foreign exchange purchase.
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