Monday, 30 Aug 2010         

 

Nigerian inter-bank lending rates remained flat at 1.1 per cent on the average this week as more cash inflow from central accounts to government agencies boosted liquidity in the system, traders said on Friday.

 

According to Reuters, ”About N110.7bn from the excess crude account, part of the allocations for state governments, was released on Monday, which raised liquidity levels,” one dealer said.The secured Open Buy Back was unchanged at 1.05 per cent, five basis points above the Standing Deposit Facility rate and 4.95 percentage points below the six per cent Central Bank of Nigeria benchmark rate.Overnight placement and call money held steady at 1.1 per cent each.

 

Traders said the opening balance in lenders‘ accounts with the central bank was about N535bn on Thursday and expected the system to remain liquid until the middle of next month when another cycle of budgetary allocation would come in.”The market is extremely liquid now and we don‘t expect major outflows in the next two weeks apart from funding for foreign exchange purchases and possible cash withdrawals by (state energy firm) NNPC,” another dealer said.

 

The Nigerian inter-bank lending rates had last week, eased to 1.1 per cent on average from 1.66 per cent after the release of large budgetary allocations to government agencies raised liquidity in the system.According to a dealer, ”The system is presently awash with cash because of the disbursement of over N300bn ($2bn) in budget allocations to the three tiers of government this week.”

 

The secured Open Buy Back dropped by 45 basis points to 1.05 per cent from 1.50 per cent penultimate week, five basis points above the Standing Deposit Facility rate and 4.95 percentage points below the six per cent central bank benchmark rate.Overnight placement fell to 1.10 per cent from 1.75 per cent, while call eased to 1.15 per cent from 1.75 per cent previously.

 

Nigeria two weeks ago, announced the distribution of N704bn from central accounts to the three tiers of government (federal, state and local) for the month of July.A portion of the funds meant for state and local governments hit the system last week.Traders said the opening balance in lenders‘ account with the central bank was in excess of N400bn then.

 

”We are anticipating the further release of about $1 billion from the excess crude account next week and this could keep rates low for the rest of the month,” another dealer said.

 

Source:Punch