Monday, 8 Nov 2010

The Nigerian inter-bank rates rose to 9.25 per cent on the average this week, from eight per cent recorded previously, following large cash withdrawals by the Nigerian National Petroleum Corporation.

The secured Open Buy Back rose to 8.25 per cent from 7.5 per cent, representing 200 basis points above the Central Bank of Nigeria‘s 6.25 per cent benchmark rate, and five percentage points higher than the Standing Deposit Facility rate.

Overnight placement jumped to 9.5 per cent from eight per cent, while call closed at 10 per cent from 8.5 per cent last week.

Reuters quoted a dealer as saying, ”The inter-bank rates rose as a result of an estimated N42bn ($280 million) withdrawal by the NNPC from the system to its accounts. We are expecting a further spike in inter-bank rates for the better part of next week until budget allocations hit the system.”

The traders said the release of about N88bn from state funds for the agricultural industry had helped to reduce the impact of outflows for foreign exchange purchases and of NNPC‘s withdrawal.

They estimated idle liquidity in the system to be less than N50bn at the close of trading on Thursday.

According to dealers, meetings of the Federation Accounts Allocation Committee, which agrees on monthly disbursals to the three tiers of government, should be held in the middle of this week, and disbursal could come by on Friday or Monday.

Source: Punch