Nigerian interbank rates climb on forex, treasury bill purchases

CBN Gov, Emefiele

Nigerian interbank lending rates climbed slightly to an average of 10.50 percent this week compared with 10.25 percent last week as liquidity gradually decreased on funding for treasury bills and foreign exchange purchases.
Traders said system glitches at the central bank, which disabled access to banks' credit balances, also impacted transactions on the interbank market in the last two days.
"We have been trading blindly because of issues with (the) system whereby we could not access our credit balance with the central bank," one dealer said.
The cash balance held by banks at the central bank was 454 billion naira ($2.8 billion) last Friday, but banks expected the position to have dropped because of payments for treasury bills and foreign exchange transactions.
The open buy-back (OBB) rate climbed 25 basis points to 10.50 percent, 1.50 percentage points below the central bank's benchmark interest rate of 12 percent.
The overnight placement rate similarly rose to 10.50 percent from 10.25 percent last week.
Traders said rates could climb further next week as a state-owned energy company prepares to recall a portion of its deposits with lenders to its account with the central bank.
NNPC, which accounts for the bulk of foreign exchange traded on the interbank market, sold about $200 million to some lenders this week with the naira proceeds from the forex sales expected to be withdrawn from the banking system to its accounts with the central bank.