Interbank rate eased to around eight per cent on Friday from 15 percent last week after the central bank repaid N152.6 billion in matured debt and paid refunds to banks for their forex cash provisions.
Operators said they expect a further drop in the overnight rate to around five per cent in the next few days if the government, as expected, releases its May budget allocations next week to its agencies. “We are anticipating additional cash flow from budgetary allocations to government agencies,” one currency traders said.
FAAC, distributes revenue from crude oil exports among three tiers of government – federal, state and local.
A portion of state and local government revenues passes through the banking system. The country’s distributable revenues rose to N462.4 billion in May, up from N415.7 billion the previous month, due to higher proceeds from corporate taxes.
Traders said about N222 billion is expected to be credited to the banking system, which would help raise the volume of cash in the money market and help push down the cost of borrowing among commercial lenders. The central bank issued N20 billion of 356-day treasury bills at 18.6 percent and N383 million of 167-day T-bills at 18 percent on Friday to reduce liquidity and curb speculation on the local currency.
Nigeria’s money market will resume trading on Wednesday after a two-day public holiday to mark Muslim festival of Eid-al-Fitr.
