Nigerian interbank lending rates eased by 100 basis points this week to an average of 10.41 percent, from 11.41 percent last week, after monthly budgetary allocations to government agencies flooded into the system.

The secured Open Buy Back (OBB) eased to 10.25 percent, from 10.5 percent last week, 1.75 percentage lower than the central bank’s 12 percent benchmark rate and 25 basis points above the Standing Deposit Facility (SDF) rate.

Overnight placement and call money closed at 10.5 percent each, compared with 11 percent last week.

Africa’s top crude oil exporter shares proceeds from oil sales from a centrally held account every month to its three tiers of government – federal, state and local – providing liquidity to the banking system and largely dictating the direction of lending rates.

Nigeria distributed 566.5 billion naira for the month of September last Friday, compared with 570 billion the previous month. Around half of it came through the banking sector on Thursday.

Traders said the market opened with a positive cash balance of about 336 billion naira ($2.13 billion) on Friday, compared with 129 billion naira last Friday.

“We expect rates to inch up slightly next week because of cash outflows to foreign exchange and treasury bill purchases,” one dealer said.

Traders said the central bank has sustained its open market operations to mop-up perceived excess cash from the system as part of its measures to fight inflation. ($1 = 157.40 naira)

Source: Punch (Reporting by Oludare Mayowa; Editing by Tim Cocks)