The nation’s interbank lending rates eased to an average of 10.37 per cent last week, compared with 10.62 per cent the previous week, with markets expecting a liquidity boost from monthly government budgetary disbursement.

Traders said though market liquidity was hit by large cash outflows to bond auction and open market operation, resulting in an outflow of about N220, the market closed with a surplus of about N200bn in cash on Friday.

The Federal Government had sold N100bn in three-year, 10-year and 20-year bonds on Wednesday, while the Central Bank of Nigeria issued about N117bn in new Open Market Operation Treasury bills.

“We are expecting a further boost in liquidity level by the close of business today (Friday) from budget allocations to government agencies and this has helped to keep the market in check,” one dealer said.

The economy distributes revenue from oil imports among its three tiers of government on monthly basis, and flows to states and local government provide the banking sector liquidity to fund operations.

The cash balance that lenders hold at the central bank was N400bn at the open of trading on Friday, compared with N204.37bn last Friday.

The open buy-back rate eased to 10.25 percent from 10.5 percent, 1.75 basis points below the central bank’s benchmark interest rate of 12 percent.

Overnight placements also dropped to 10.50 per cent last week compared with 10.75 per cent the previous week.

Punch