Nigeria's Interbank rates rise on short cash supply

Nigeria’s interbank lending rates rose further last week to an average of 15.25 per cent from penultimate week’s 14.91 per cent as the Nigeria National Petroleum Corporation (NNPC) soaked up available local naira currency.

NNPC sells dollars to some lenders regularly and transfers a portion of the naira proceeds to its account with the Central Bank of Nigeria (CBN). The energy company has sold more than $700 million to some banks in the last few weeks, traders said.

Traders according to Bloomberg news said the cost of borrowing could rise further this week if the NNPC continue its cash withdrawals coupled with expected naira outflows into treasury bills and foreign exchange.

“Hopefully, respite may come to the market next week if government release a portion of budget allocations to its agencies, otherwise the cost of borrowing will definitely jump further,” one traders said.

The secured Open Buy Back (OBB) was unchanged at 14.50 per cent, 250 basis points above the CBN’s 12 per cent benchmark rate, and 4.50 percentage points above the Standing Deposit Facility (SDF) rate.