The country’s interbank lending rates; the rate at which banks lend funds to one another rose last Friday to an average of 14.25 per cent from 14 per cent on Tuesday as foreign exchange purchases and other dealings drained liquidity from the system.
The market was closed for business last week due to an eight-day strike prompted by a dispute over fuel import subsidies.
The Secured Open Buy Back (OBB) rate closed at 14 per cent on Friday, up from 13.75 per cent on Tuesday. OBB was 200 basis points above the central bank’s 12 per cent benchmark rate and 4.00 percentage points above the standing deposit facility rate.
Overnight Placement rose to 14.25 per cent, from 14 per cent last week, while Call Money jumped to 14.50 per cent, against 14.25 per cent.
The market opened with a cash balance of about 94.8 billion naira ($587.03 million) on Friday, traders said, but they expected liquidity positions to improve next week as budget allocations to government agencies would be credited to their bank accounts.
“We see rates falling next week because of the expected release of December budgetary allocation to government agencies later on Friday,” one dealer told Reuters.
Nigeria, Africa’s top energy producer distributes revenues from crude oil export to its three government tiers - federal, state and local - a portion of which filters through the banking system and helps provide liquidity for their operations.
Some dealers said a rate drop may likely occur earlier in next week but could climb later due to a planned auction of about N89.7 billion in 10-year bond on Wednesday by the Debt Management Office (DMO).