In­ter­bank rate rises on cash short­age

Daily Trust - - BUSINESS -

The in­ter­bank overnight lend­ing rate rose sharply Fri­day, to an av­er­age of 15 per cent from five per cent a week ago, af­ter the Cen­tral Bank of Nige­ria (CBN) deb­ited com­mer­cial lenders for trea­sury bills pur­chases.

A to­tal of N190bn (about $670m) in trea­sury bills was raised at the stock ex­change floor with ma­tu­ri­ties rang­ing from three months to one year, with yields broadly flat.

The CBN sold N28bn of the 3-month trea­sury bills at 9.98 per cent, com­pared with 9.99 per cent at the June 22 auc­tion and N42bn worth of the 6-month bill at 12.24 per cent against 12.30 per cent pre­vi­ously.

The bank sold N120bn worth of the one-year pa­per at 14.99 per cent, the same rate as at the last auc­tion.

The Reuters re­port said that the trea­sury bills were is­sued as part of mea­sures to fi­nance the gov­ern­ment bud­get deficit and help man­age liq­uid­ity in the bank­ing sys­tem.

Mar­ket liq­uid­ity had opened at 167.26bn naira, Fri­day, but the money mar­ket went into repo af­ter the cen­tral bank sold trea­sury bills which sig­nif­i­cantly re­duced level of cash in the bank­ing sys­tem, push­ing up cost of bor­row­ing among banks.

“The mar­ket was trad­ing around 10 per cent for overnight place­ment prior to the sale of trea­sury bills, but rose sharply to an av­er­age of 15 per cent shortly af­ter the re­sult of the auc­tion was an­nounced,” one dealer said.

The fi­nan­cial mar­ket was closed for trad­ing from Tues­day to Thurs­day for a pub­lic hol­i­day (Reuters).

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.