Lagos - Nigerian interbank lending rates
eased marginally to around 10.16 percent on Friday from an
average 10.3 percent last week, helped by liquidity from matured
treasury bills and flows from government agencies.
"The market is seen flat next week until the debiting of the
new cash reserves on 7 August, which is expected to take out huge
liquidity from the system with rates hitting the roof," one
The regulator announced on Tuesday that it will impose a 50
percent cash reserve requirement on banks' public deposits to
curb the practice of taking deposits and lending the money back
to the government at a profit. The squeeze on liquidity is also
aimed at supporting the naira.
Dealers said the current cost of borrowing among banks has
been pushed down by the repayment of about 56 billion naira in matured treasury bills while 80 billion meant
for public sector wages also hit the system.
The market opened with a cash balance of about 514 billion
naira on Friday, compared with 300 billion naira last week.
The secured Open Buy back (OBB) eased marginally to 10.1
percent from 10.15 percent last week, 1.9 percentage points
lower than the central bank's benchmark interest rate.
Overnight placement dropped to 10.15 percent compared with
10.25 percent, while call money closed at 10.5 percent compared
with 12.5 percent last week.
Dealers say the new cash reserve measure, taking out around
900 billion naira of public sector cash deposited with lenders,
could push up cost of borrowing in the market.
"We don't expect the central bank to sell open market
operation debt notes next week because of the planned debiting
for the new CRR," another dealer said.