By Our Correspondent

Nigerian inter-bank lending rates were stable at nine per cent on the average this week as cash inflows from government agencies countered the impact of huge outflows for foreign exchange purchases and withdrawals by the state oil company.

The secured Open Buy Back closed flat at 8.50 per cent, 200 basis points above the Central Bank of Nigeria’s 6.50 per cent benchmark rate and 4.5 percentage points higher than the Standing Deposit Facility rate.

Overnight placement and call money also closed unchanged at nine per cent and 9.50 per cent respectively, according to Reuters.

Traders said the Nigerian National Petroleum Corporation recalled about N60bn from its deposits with some lenders to its CBN’s account, a process that started two weeks ago and continued last week.

“There were cash inflows for personnel costs and refunds to some government agencies into the system this week, which countered the impact of the large outflows to NNPC, foreign exchange and treasury bill purchases on liquidity in the market,” one dealer said.

The market opened on Friday with a balance of N107.24bn in banks’ accounts with the CBN.

The NNPC had sold about $400m to some banks in the last two weeks and the cash withdrawal was part of regulatory measures to curb money supply in the system and rein in inflation.

Traders said the cost of borrowing at the inter-bank should remain stable next week due to an expected refund on banks’ cash reserves ratio by the CBN and a possible inflow from government intervention funds meant to revive the industrial sector.

Seven-day funds at the Nigeria Inter Bank Offered Rate eased to 9.66 per cent from 10.91 per cent, 30-day closed at 10.70 per cent; from 11.21 per cent; 60-day traded at 11.29 per cent against 12.12 per cent; while 90-day dropped to 12.12 per cent from 12.83 per cent two weeks ago.

Nigeria plans to auction N80bn ($520m) in 91-day, 182-day and 364-day treasury bills next Wednesday as part of measures to control money supply and curb inflation, the Central Bank of Nigeria said on Friday.

The bank said it would auction N20bn in 91-day bills and N30bn each in 182-day and 364-day papers using the Dutch Auction System.

The result is expected to be released the following day, according to Reuters on Friday.

The Federal Government issues treasury bills regularly as part of monetary control measures to try to rein in inflation and help lenders manage their liquidity.

The CBN wants to get headline inflation, which stood at 12.1 percent year-on-year in January and has been in double digits since 2009, back down below 10 per cent.

Source: Punch