NIGERIAN interbank lending rates were stable at record lows last week after additional funds from the country’s windfall oil savings were disbursed to government agencies, dealers have said.
The secured Open Buy Back (OBB) was flat at 1.10 percent, 10 basis points above the central bank’s Standing Deposit Facility SDF rate, but well below the bank’s 6.0 percent benchmark interest rate. Overnight placement and call money were also stable at 1.20 percent and 1.25 percent, respectively.
About 79 billion naira ($532.7 billion), part of the planned $1 billion disbursal from the windfall oil savings, finally hit the system last Tuesday. This further swelled liquidity with few alternative investment outlets, traders said.
“The market has (an) over 600 billion naira deposit balance with the Central Bank of Nigeria as at Thursday, while the idle portion was about 158 billion naira,” one dealer said. 
Traders said despite the sale of $307.77 million at the CBN’s bi-weekly forex auction and 40 billion naira in 91-day and 182-day treasury bills, there was still enough liquidity to meet all obligations. 
“Not much is happening in the market as most banks merely place their idle cash with the apex bank, given the fact that there is no other alternative source of investment,” another dealer said. Nigerian banks depend largely on the cyclical release of funds from the central account to the three tiers of government — federal, state and local — for their operations. 
But a credit freeze has forced many of the banks to deposit their surplus cash with the regulators, despite the cut in the SDF by 100 basis points to 1.0 percent last month. Traders said the rates will stay relatively stable as the market is expected to remain liquid in the short-term.