Nigeria interbank rate stays flat on ample liquidity

Nigeria's overnight lending rate held steady at 1 percent for the fourth consecutive week on Friday, as the money market remained sufficiently liquid, traders said.
"The market has been trading flat because of huge liquidity in the banking system without any major cash outflow from the market," one dealer said.
Nigeria's central bank last month slashed its benchmark interest rate to 11 percent from 13 percent to stimulate growth through lending to producers, but many banks are not lending due to an increased risk of default by borrowers.
Dealers said that although about 50 billion naira ($253 million) was debited from commercial lenders' accounts by the central bank on Friday for bond purchases, the market opened at about 708 billion naira, leaving plenty of liquidity.
The secured open buy-back (OBB) - the rate at which lenders can borrow from the interbank market using treasury bills as collateral - remained flat at 0.5 percent, far below the central bank's benchmark rate.
The overnight placement rate also closed flat at 1 percent on Friday.
"We expect the system to remain liquid next week and interbank rate trading at the prevailing level because of possible refund of an unspecified amount from cash banks had deposited with the central bank for forex purchases," another trader said.