Inter-bank rates climb on large cash outflows


MONDAY, 16 AUGUST 2010 01:13  


Inter-bank lending rates climbed to 1.66 percent on average last week from 1.08 percent penultimate week due to large cash outflows to forex and treasury bills purchases by commercial banks, traders said. They said cash withdrawals by state energy firm, Nigerian National Petroleum Corporation (NNPC) from some retail banks to its central bank account also helped drain liquidity from the system.


The secured Open Buy Back (OBB) rose 45 basis points to 1.50 percent, 50 basis points above the Standing Deposit Facility (SDF) rate and 4.50 percentage points below the central bank benchmark rate. Overnight placement and call money each climbed to 1.75 percent from 1.10 percent penultimate week. “The opening balance (of lenders) with the central bank fell to N226 billion ($1.51 billion) on Friday (from N339 billion penultimate week) due to funding pressure for forex and treasury bills purchases and the withdrawal by the NNPC,” one dealer said.


The central bank sold N96.7 billion in 364-day, 182-day and 91-day treasury bills last week, while it sold $339 million at its bi-weekly foreign exchange auctions. Traders said the NNPC recalled about N50 billion, being local currency proceeds of the dollars it sold to some banks in the last two weeks.


The Federation Accounts Allocation Committee (FAAC) said weekend it has distributed N704 billion to the three tiers of government — federal, state and local — for the month of July, but bankers said about half of the amount is expected to hit the banking system on Tuesday to buoy liquidity. “We expect the rates to crash immediately part of monthly budgetary allocations to state and local governments hit the system latest by Tuesday,” another dealer said.


The Central Bank of Nigeria (CBN) sold N96.70 billion ($644.66 million) in treasury bills and bonds last week as part of measures to control money supply and help banks manage their liquidity, the apex bank said weekend.


The central bank sold N40 billion each in 364-day bonds and 182-day bills and N16.70 billion in 91-day paper on Wednesday, results of the auction released weekend showed. The regulator said the 364-day bonds attracted a 4.38 percent yield down from 4.61 percent at previous auction, while the yield on the 182-day paper dropped to 3.71 percent from 3.99 percent and that of the 91-day bills fell to 2.76 percent from 2.89 percent.


The CBN issues treasury bills regularly as part of monetary control measures. The central bank said total subscription for the papers stood at N271.45 billion, but it stuck to its initial offer of N96.7 billion.






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