By Ademola Alawiye

Monday, 13 Dec 2010

Inter-bank rates rose last week as a result of pressure on rates from the foreign exchange market despite efforts by the Central Bank of Nigeria to douse the tightness in the market through its Open Market Operations.

Available data from the FSDH Weekly Report showed that the Seven-day Nigerian Inter-Bank Offered Rate closed the week at 13.04 per cent, a 204 points increase from 11 per cent recorded the previous week.

The 90-day NIBOR closed the week at 14.46 per cent, a 29 points increase from the previous week‘s figure of 14.17 per cent.

At the 91-day Treasury Bill auction, a total of N20bn worth of securities was offered and sold, while N8.36bn was sold to non-competitive bidders, bringing total offer and sale to N28.36bn.

At the OMO Re-purchase auctions held during the week, there was a total outflow of N54.95bn, while total inflow was about N114.32bn.

In all, there was a total outflow of N179.33bn from the primary segment of the government securities market, while the CBN also injected about N229.32bn into the system through these markets, leading to a net inflow of N49.99bn into the system.

The value of the naira appreciated at the official segment of the foreign exchange market during the week, while it depreciated at the inter-bank and parallel markets.

On the outlook of the money and fixed income markets, analysts said the allocation for the month of December that would be released soon by the Federation Accounts Allocation Committee would make the market liquid. Consequently, inter-bank rates might dip from their current levels.

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

 

Source: Punch