New to site?


Lost password? (X)

Already have an account?



Nigerian interbank rate falls after banks rediscount debt notes – Reuters

HomeNewsNigerian interbank rate falls after banks rediscount debt notes – Reuters
Nigerian interbank rate falls after banks rediscount debt notes – Reuters
  • Author
  • Comments
  • Category

LAGOS, June 24 (Reuters) – Nigeria’s interbank overnight rate eased 20 percentage points to 15 percent on Friday from Thursday’s close after some banks approached the central bank’s discount window for short-term cash accommodation, traders said.

The cost of borrowing had peaked at 60 percent for overnight lending on the interbank on Wednesday and eased to 35 percent on Thursday after banks resorted to rediscounting their fixed income instruments to get short-term cash from the central bank.

On Thursday, some banks increased their borrowing from the Standing Lending Facility (SLF) of the central bank to around 420 billion naira ($1.5 billion) in a bid to ease liquidity pressure, after the central bank debited commercial lenders for forex purchase at the new forex market.

The cost of borrowing at the central bank SLF window was 14 percent, but not all commercial lenders choose to resort to the facility because they are required to pledge their treasury bills or bonds holdings as collateral for borrowing.

The central bank caved in to ditch the peg on the naira to allow the currency to trade freely on the interbank market, abandoning its 16-month-old peg at 197 to the dollar this week.

On Monday, the central bank sold $3.5 billion on the forward market after it auctioned $532 million and intervened on the interbank market to clear a backlog of hard currency orders worth around $4 billion. The bank then debited banks accounts for the naira proceed, leaving the market short of cash.

“Interbank lending rates are seen dropping further next week because of expectations of cash flow from budget disbursement to government agencies,” one dealer said.

Nigeria distributed 305 billion naira from oil revenue among its three-tier government on Wednesday, dealers said.

Half of the May budgetary disbursal will pass through the banking system next week.

($1 = 282 naira) (Reporting by Oludare Mayowa; Editing by James Macharia)


Related Posts