Nigerian interbank rates ease on increasing liquidity

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LAGOS, April 2’s overnight lending rates fell to an average of 9.6 percent on Thursday from 12.5 percent last week, after the central bank retired some matured treasury bills, increasing liquidity in the money market.

Traders said a total of 148 billion naira ($744 million) in matured treasury bills was repaid by the bank.

“The market experienced a major liquidity boost today from matured treasury bills…rates on secured lending fell in tandem,” one dealer said.

Nigeria’s money market is closed for on Friday and will reopen on Tuesday after publics holidays.

The secured Open Buy Back (OBB) fell to 9 percent from 12 percent last week. The secured fund was four percentage points below the 13 percent central bank’s benchmark interest rate.
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Overnight placement also eased to 10.25 percent compared 13 percent last week.

Dealers said rates could rise marginally on the expected recall of some funds from commercial banks by the central bank to meet the lenders’ cash reserves requirements.

The central bank requires commercial lenders to aside 75 per cent of public sector and 15 per cent of private sector deposits in liquid cash in their respective accounts with the regulator. The central bank debits commercial banks accounts twice every month to enforce this requirement.

($1 = 199 naira) (Reporting by Oludare Mayowa; Editing by James Macharia) (Reuters)