Inter-bank lending rates fell this week to an average of 14.41 per cent, down from 15.33 per cent last week, as mature treasury bill funds boosted liquidity and helped ease pressure on the cost of borrowing.

Currency traders said though the market opened with a negative balance of N42.60bn ($270.37m) on Thursday but the repayment of about N98bn in mature open market operation bills boosted liquidity.

Rates on short-term borrowing on the inter-bank had risen to around 15.5 per cent for overnight at the close of the  market on Wednesday because of large fund withdrawals by the Nigerian National Petroleum Corporation.

Reuters quoted a dealer as saying, “The injection of about N98bn into the system from mature Open Market Operations bills brought down cost of borrowing among banks today.”

NNPC usually sells dollars to banks on a monthly basis and recalls a portion of the naira proceeds to its account with the Central Bank of Naira.

The secured Open Buy Back fell to 14.25 per cent from 14.75 per cent last week, representing 225 basis points above the CBN’s 12 per cent benchmark rate, and 4.25 percentage points above the Standing Deposit Facility rate.

Overnight placement and call money eased to 14.50 per cent each from 15.50 per cent 15.75 per cent respectively last week.

Another dealer was quoted as saying, “The market will still open at this level next week until we start funding foreign exchange purchases, treasury bills auction and other transaction, which would drain liquidity in the system and push up rate later in the week.”

According to the statement, Nigeria’s financial markets are closed on Friday and Monday for the Easter holiday.

 The naira was unchanged against the US dollar on Wednesday after the CBN increased dollar supply at the bi-weekly foreign exchange auction.

 The naira closed at N157.65 against the dollar on the inter-bank market, the same rate as the previous day.

Traders said anticipated dollar sales by the NNPC failed to materialise, but dollar liquidity in the market was able to meet demand from customers.

 At the bi-weekly auction, the CBN sold $150m at N155.90 to the dollar, compared with $100m sold at N155.90 to the dollar at Monday’s auction.

The CBN also said on Wednesday that it would auction N183.64bn ($1.17bn) in treasury bills at its regular monthly debt auction next week.

 It said it would sell N30.15bn in 91-day paper and N73.49bn in 182-day bills and N80bn in 364-day bills next Wednesday.

Source: Punch