Nigerian interbank rates ease on budget, matured T-bills cash

Nigeria's interbank lending rates eased on Friday to an average of 6.75 percent, falling from 12 percent last week, after a series of cash inflows from budgetary allocations and retired matured open market operations (OMO) bills hit the banking system.
Traders said banks' cash balance with the central bank stood at 359 billion naira on Friday, in spite of a series of large cash outflows to treasury bill sales and cash reserve requirement debits by the central bank in the week.
The central bank sold OMO bills worth about 142 billion naira in the week and debited commercial lenders about 3 billion naira to cover their CRR position.
However, the injections of about 102 billion naira in matured OMO bills on Thursday and around 250 billion naira in budgetary allocations to government agencies countered the impact of the cash outflows to treasury bill purchases.
Africa's top crude exporter distributes revenues from oil exports among its three government tiers - federal, states and local - on a monthly basis.
A portion belonging to states and local government passes through the banking system, boosting liquidity.
"The drop in interbank rates was due mainly to increased liquidity in the system this week," one dealer said.
Secured Open Buy Back (OBB) declined to 6 percent on Friday from 12 percent last week, 7 percentage points below the 13 percent central bank's benchmark rate.
Overnight placement also eased to 7.5 percent against 12 percent last week.
Traders said interbank rates are expected to inch up to around 10 percent next week on the possible increase of mopping up exercises by the central bank and cash outflow to treasury bill purchases at the primary auction.