Nigerian interbank rates dip as retired T-bills boost liquidity

Nigeria's interbank lending rate fell to an average of 8.5 percent on Friday from 14.25 percent last week as funds from matured Treasury bills offset the impact of the central bank's new Cash Reserves Requirement (CRR).
The central bank on Tuesday harmonised the CRR on public and private sector deposits to 31 percent. Previously the CRR on private sector deposits was 20 percent and 75 percent for public sector deposits.
The central bank recalled about 140 billion naira ($704 million) in CRR from the banking system on Thursday in line with its new regime but about 191 billion naira in retired Treasury bills was repaid, boosting liquidity in the market.
Traders said market liquidity was also increased by flows of about 198 billion naira in budgetary allocations to states and local government during the week.
Banks had a cash balance of about 220 billion naira at the central bank by Thursday versus 214 billion naira last week.
The secured Open Buy Back eased to 8 percent from 14 percent last week, below the central bank's 13 percent benchmark rate.
The overnight placement also fell to 9 percent against 14.5 percent last week.
A trader said lending rates would likely be stable next week on further cash flows from the government to its crude oil production joint venture partners as well as other remittances to government agencies.