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Interbank rates fall on matured Treasury bill

News » Business

 Image: Nigeria currency


APril 6 2012


Interbank lending rates fell this week to an average of 14.41 percent, down from 15.33 percent last week, as matured treasury bill funds boosted liquidity and helped ease pressure on the cost of borrowing, traders said.

Traders said though the market opened with a negative balance of N42.60 billion ($270.37 million) on Thursday but the repayment of about N98 billion in matured open market operation (OMO) bills boosted liquidity.

Rates on short-term borrowing on the interbank had risen to around 15.5 percent for overnight at the close of market on Wednesday because of large fund withdrawals by state-owned energy company NNPC.

"The injection of about 98 billion naira into the system from matured OMO bills brought down cost of borrowing among banks today," one dealer said. NNPC usually sells dollars to banks on a monthly basis and recalls a portion of the naira proceeds to its account with the central bank.

The secured Open Buy Back fell to 14.25 percent from 14.75 percent last week, 225 basis points above the central bank's 12 percent benchmark rate, and 4.25 percentage points above the Standing Deposit Facility rate.

Overnight placement and call money eased to 14.50 percent each from 15.50 percent 15.75 percent respectively last week. "The market will still open at this level next week until we start funding foreign exchange purchases, treasury bills auction and other transaction, which would drain liquidity in the system and push up rate later in the week," another dealer said.

Nigeria's financial markets are closed on Friday and Monday for the Easter holiday.



Article credit: BusinessDay Newspaper

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