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Nigerian inter-bank rates drops on improve cash outlook

by Business News Report

Nigeria’s interbank lending rates dropped marginally this week to an average of 15 per cent from last week’s 15.25 per cent on expectations of cash inflows from budgetary allocations to government agencies on Friday. “People know that budget allocation has been approved and will soon be released, so there is this psychological impact on the market pricing. We are expecting that the budget funds will come in and then rates will fall further,” a dealer said.
Traders said the market opened with a cash deficit of about 9.50 billion naira ($3.18 million) on Friday, reflecting tight liquidity. But they said the cost of borrowing among banks should ease further next week with the expected release of budgetary funds. The secured Open Buy Back (OBB) was unchanged at 14.50 percent, 250 basis points above the central bank’s 12.0 percent benchmark rate, and 4.50 percentage points above the Standing Deposit Facility (SDF) rate. Overnight placement dropped to 15 percent from 15.50 percent, while call money traded at 15.50 percent compared with 15.75 percent last week.

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