Nigerian Interbank Rate Rises On Drop In Liquidity

Nigeria’s interbank lending rate rose to 1 percent on secured lending on Friday from 0.5 percent previously, amid drop in banking system liquidity on the back of foreign exchange and treasury bills purchases, traders said.
Traders said the central bank has also failed to update data on commercial lenders cash balance since Monday, putting most dealers in the dark about the volume of liquidity available in the market to trade with. 
“We have cash outflows to forex purchases at the central bank intervention on Thursday and treasury bills purchased at the primary market, but lack of data on our cash balance has put some dealers in the dark on the level of liquidity in the market,” one dealer said.
Traders said most of them traded based on the last update on cash balance, which was put at around N600 billion last Friday.
Nigeria sold N119.92 billion ($600 million) in Treasury bills with maturities from three months to a year at an auction this week, but traders said there was equivalent amount of in retired matured bills which upset the amount sold. 
The secured open buy-back (OBB) – the rate at which lenders can borrow from the interbank market using treasury bills as collateral – rose to one percent from 0.5 percent last week, still far below the central bank’s 13 percent benchmark interest rate.
Unsecured overnight placement traded at 1.5 percent against 1 percent last week.
“The market would take its cue from the outcome of MPC- Monetary policy Committee – meeting on Tuesday,” another dealer said.
Traders said the rate-fixing MPC meeting, the last in the year may not effect any significant change in the present condition in respect of interest rate.

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