Nigerian interbank rates ease on budget cash injection

Nigeria's interbank lending rate eased to an average of 6 percent on Friday from 15 percent last week thanks to increased naira liquidity from monthly budgetary allocations to government agencies.
About 220 billion Nigerian naira ($1.1 billion) in budget allocations to the three tiers of government - federal, state and local - was injected into the banking system late on Thursday, boosting liquidity and forcing down lending rates.
Nigeria, Africa's biggest economy, distributes revenue from oil exports and taxes among its three tiers of government every month and the portion for states and local government passes through the banking system.
 Traders said in spite of the mopping up of about 203 billion naira through sales of Treasury bills on open market operations, net credit of 160 billion naira in matured Treasury bills was injected back into the system.
"Lending rates among banks are seen stable at the present level next week because we expect the market to remain liquid unless the central bank embarks on aggressive mopping up of excess liquidity," one trader said.
Banks credit balance with the central bank stood at 404 billion naira on Friday.
Both the secured open buy back (OBB) and overnight placement rates closed at 6 percent on Friday, down from 15 percent last week and below the benchmark central bank lending rate of 13 percent. Overnight placement was also at 15 percent last week.