Nigeria distributes money from oil revenue to its three tiers of government from a centrally held account, which provides liquidity for the banking sector and eases the cost of borrowing among banks.
Traders said the central bank withdrew debt notes initially offered at an open market operation (OMO) owing to a disagreement on yield levels because the market want higher returns than what the bank was willing to offer.
"Cost of borrowing among banks fell this week because there was no major cash outflow from the system apart from the 33 billion naira debited for cash reserves ratio on Thursday," one dealer said.
Total banking system liquidity stood at 408.25 billion naira on Friday, up from 277 billion naira last week, dealers said.
The central bank sold a total of 143.85 billion naira in short-dated treasury bills at an auction on Wednesday, but no cash left the system because the same amount of treasury bills also matured, resulting in a rollover.
"We expect interbank rate to inch up slightly next week as banks make deposits for dollar purchase at the central bank weekly sale," another dealer said.
*First published by Reuters
0 comments:
Post a Comment