By Ademola Alawiye

Monday, 29 Nov 2010

Inter-bank rates dipped last week as a result of the effect of the monthly allocation from the Federation Account Allocation Committee for the month of November and about N127.73bn personnel cost that hit the system.

According to available data from the FSDH Weekly Nigerian Capital and Money Market Report, inter-bank lending rates fell to 5.83 per cent on average, from 8.08 per cent recorded the previous week.

The value of naira depreciated in all three segments of the foreign exchange market during the week. The value of naira depreciated by 11 kobo, 30 kobo and 30 kobo to close at N149, N150.70 and N152.80 at the official, inter-bank and parallel markets respectively.

According to analysts, the positive outlook of oil price and the improved outlook on oil production are good indicators for improved foreign exchange inflows into the economy which should cause the value of naira to appreciate marginally in the medium term.

The seven-day Nigerian Inter Bank Offered Rate closed the week at 6.29 per cent, a 225 basis point decrease from the previous week‘s figure of 9.17 per cent, while the 90-day NIBOR closed the week at 12.42 per cent, as against 12.50 per cent recorded the previous week.

At the 91-day Treasury bill auction, a total of N30.46bn worth of securities was offered, while N17.65bn was sold. The bill was 169.82 per cent subscribed as N51.72bn worth of bid was received.

At the 182-day TB auction, a total of N45bn worth of securities was offered while N30.68bn was sold. The bill was 124.24 per cent subscribed as N55.91 worth of bid was received.

At the 364-day TB auction, a total of N50bn worth of securities was offered while N30.54bn was sold. The bill was 110.57 per cent subscribed as N55.29bn worth of bid was received. It was issued at a discount rate of 10.25 per cent, bringing the transaction to a net outflow of N30.54bn.

At the Open Market Operations, there was a total inflow of about N80bn into the market through repurchase transaction. There was no mop up activity in this segment of the money market during the week.

At the foreign exchange auction, the Central Bank of Nigeria offered and sold a total of $500m in all, while demand stood at $586.87m, representing 117.37 per cent of the total offer and sale.

Cumulatively, there was a net total outflow of N28.89bn from the money market through the government securities and the foreign exchange market during the week.

Source: Punch