Inter-bank lending rates eased marginally last week to an average of 10.58 per cent, from 10.83 per cent the previous week, as market liquidity was boosted by repayment of large funds in matured treasury bills.

Dealers said about N95bn ($603.75m) in maturing treasury bills hit the system last week, boosting liquidity.

The market opened with a cash balance of about N326.6bn on Friday, compared with N317bn balance last Friday.The secured Open Buy Back fell marginally to 10.25 per cent, compared with 10.5 per cent recorded the previous week, 1.75 percentage points lower than the Central Bank of Nigeria’s 12 per cent benchmark rate and 25 basis points above the Standing Deposit Facility rate.

Overnight placement fell to 10.50 per cent, from 11 per cent the previous week, while call money was unchanged at 11 per cent.

Reuters quoted a dealer as saying, “Market will remain liquid this week because of the expected net credit of about N100bn from maturing treasury bills and rates should be flat, unless the CBN embarks on a mop-up exercise.”

Nigerian financial markets will close until Tuesday because of a public holiday. The naira had traded flat against the United States dollar at both the inter-bank and foreign exchange markets last Monday, as strong demand for the greenback soaked up liquidity from two oil firms and the CBN’s currency auction.

At the bi-weekly auction, the CBN increased dollar supply to $200m, from the $180m it sold at last Wednesday’s auction, but maintained the rates at N155.78.

Dealers said the local unit of French oil firm, Total, sold $44m to some banks while Agip sold around $7m, but strong demand lapped it up.

The naira traded around the N157 and N158 level to the dollar over the past one month, owing partly to dollar sales from oil companies and inflows from offshore investors buying bonds.

A total of N570bn ($3.62bn) was distributed from oil receipts to the three tiers of government a forth night ago, and traders said about half of the funds hit the system last Thursday, sinking the cost of borrowing among banks.

Source: Punch