Nigerian interbank rate flat as mkt liquidity rises

Nigeria's overnight lending rate remained flat at 1 percent for a third consecutive week on Friday, as money market liquidity rose to over one trillion naira ($5.05 billion) after budgetary disbursal to government agencies, traders said.
Nigeria, Africa's biggest economy, disburses revenue from crude exports among its three tiers of government - federal, states and local - on a monthly basis and a portion of state and local government funds passes through the banking system.
Dealers said over 221 billion naira belonging to state and local governments hit the banking system this week. Market liquidity was also boosted by central bank refunds on Friday of about 400 billion naira cash set aside by banks to buy dollars.
Traders said the central bank for the first time in three month sold about 47 billion naira this week in Open Market Operation (OMO) bills, but the impact on market liquidity was minimal due to further cash inflows from other sources.
"Since the central bank has shown willingness to resume issuance of OMO bills, we expect an aggressive mopping up of liquidity next week to further reduce excess cash in the system," one trader said.
The secured open buy-back (OBB) - the rate at which lenders can borrow from the interbank market using treasury bills as collateral - closed at 0.5 percent, far below the central bank's benchmark rate.
Overnight placement closed flat at 1 percent on Friday.
Banking system credit stood at about than 1.2 trillion naira on Friday, up from 571 billion naira last week.
The central bank had last week lowered the cash reserve ratio for commercial banks to 20 percent from 25 percent, in a move to encourage banks to lend money to the productive sector and stimulate growth.