…Call rates down from 8.67% to 3.75% in a week
Following the release of funds by the Federation Account Allocation Committee (FAAC) this week, inter-bank lending rates have visibly crashed in the low-tenured end of the market.
Call rate at the Nigerian Inter-Bank Offer Rate (NIBOR) fell from 8.6667 percent as at November 11, 2009 to 3.75
percent as at November 18, 2009. The NIBOR rate for 7-day inter-bank lending fell from 10.4167 percent to 7.2083 percent, while the 30-day lending rate from 15.0417 percent to 12.2083 percent during the same period.
Wale Abe, chief executive officer of Financial Market Dealers Association of Nigeria (FMDA), said the rates usually oscillate when FAAC releases fund to the 36 states of the federation and the Federal Government.
According to him, when the money dries up the rates go up again, but most times usually bows to market forces when FAAC releases the monthly statutory allocation.
BusinessDay had earlier reported that the inter-bank lending rates were expected to lower this week following the expected release of the statutory release of fund by the Federation Accounts Allocation Committee (FAAC).
Also an additional N30 billion worth of maturities are expected to come into the system from government securities this week to boost liquidity.
But last week, the tightness experienced in the inter-bank market persisted as there was no major injection into the system during the week. Consequently, inter-bank rates inched up to end the week.
Available data showed that the 7-day Nigerian Inter-Bank Offer Rate (NIBOR) closed the week at 10.75 percent last Friday, a 183 basis point increase from the previous week’s figure of 8.92 percent. Also, during the period, the 90-day NIBOR closed the week at 16.25 percent, a 17 basis point increase from the previous week’s figure of 16.08 percent.
Last week, at the 91-day Treasury Bill (TB) auction, a total of N15.11 billion worth of securities was offered and sold. The bill was 140 percent oversubscribed as N36.25 billion worth of bid was received. A total of N15.11 billion was repaid into the system thereby netting off the outflow from the system. The bill was issued at a discount rate of 4.66 percent.
At the 182-day TB auction, a total of N30 billion worth of securities was offered and sold, while it was 22.88 percent oversubscribed as N36.86 billion worth of bid was received. The bill was issued at a discount rate of 5.66 percent.
