Nigerian interbank rates ease on budgetary allocations

Nigerian interbank lending rates eased 2.25 percentage points on Friday to an average of 10.5 percent, from 12.75 percent last week, boosted largely by a naira liquidity injections from budgetary allocations and matured T-bills.
   Traders said about 349 billion naira ($2.21 billion) in monthly budgetary allocations to state and local governments hit the market on Tuesday with additional cash flow from matured treasury bills of about 123 billion naira on Thursday.
    Dealers were, however, at times unable to access their balances with the central bank due to system glitches arising from switch to the new Financial Markets Dealers Quotations (FMDQ) platform, which replaced the current telephone dealing system this week.
   Nigeria, Africa's second biggest economy, distributes revenue from oil exports among its three tiers of government on a monthly basis with the portion due to state and local governments passed through the banking system.
   "The system remains liquid from cash flows from budget distributions and matured treasury bill repayments, but the volume of transactions have been reduced considerably due to system challenges," one dealer said.
   The open buy back (OBB) eased to 10.5 percent, two percentage points lower than 12.5 percent last week and 1.5 percentage points below the central bank's benchmark interest rate of 12 percent.
   Overnight placement closed at 10.25 percent, against 12.75 percent last week, while call money rose to 10.75 percent compared with 13 percent last week.
   "We hope to see the system challenges resolved next week, but don't anticipate major activity in the market as a result of shorter trading week," another dealer said.