Large cash withdrawals by Nigeria National petroleum Corporation(NNPC) boosted interbank lending rates to 9.25 percent on average last week, as against 6.0 per cent the previous week. The secured Open Buy Back (OBB) rose to 8.25 per cent from 5.0 per cent, 200 basis points above the Central Bank of Nigeria (CBN)’s 6.25 per cent benchmark rate and 500 percentage points above the Standing Deposit Facility (SDF) rate. Overnight placement inched up to 9.50 per cent from 6.0 per cent, while call money traded at 10 per cent against 7.0 per cent the previous week. Traders said the market was short by about N28 billion when it opened on Friday due to a large cash withdrawal by NNPC which was estimated at N85 to N90 billion . A dealer said, “The system was in deficit after the large withdrawal by NNPC and funding for the purchases of forex and treasury bills last week’s Thursday, causing rates to spike.” The state-owned energy firm usually sells dollars to banks every month and recalls a portion of the naira proceeds to its accounts with the apex bank, leaving lenders short of funds. Dealers said the cost of borrowing among banks could ease this week, even with the expectation of large releases from December budgetary allocations. However, Nigeria announced on Friday the release of N410.78 billion from the federation accounts to the three tiers of government and traders said half of this could hit the system by Tuesday. This, they said will ease tight liquidity. Meanwhile, the country sold N135.57 billion in treasury bills at its latest auction last week’s Thursday as part of measures to control money supply in Nigeria.
The CBN sold N45.84 billion at 10.19 per cent in 364-day treasury bills, 45.40 billion naira in 182-day paper at 9.45 percent and N44.33 billion in 91-day papers at 7.59 percent. Nigeria auctions treasury bills regularly to control money supply, curb inflation and help banks manage their liquidity. The bulk of the funds invested in the treasury bills, traders said were rolled over from the previous issue, which matured last week. the week.