Interest rates rise on account of NNPC N5bn withdrawals

This is likely going to impact on the cost of capital and finally the cost of doing business.

The result is that liquidity tightness persisted in the money market last week.

The 7-day Nigerian Bank Offer Rate (NIBOR) inched up gradually last week to close the week at 9.79 percent from previous week’s figure of 9.42 percent.

The 90-day NIBOR also inched up closing the week at 13.08 percent from the previous week’s figure of 12.83 percent.

The FSDH Weekly said N5-billion worth of bills was offered at the 91-day Treasury bill trading, while N10.33-billion was subscribed and the amount sold was N5-billion. A total of N10-billion worth of maturities was repaid in the week resulting in an inflow of N5-billion.

The bill was issued at 7.45 percent against previous week’s rate of 7.35 percent, representing an increase of10 basis point. The rates increased as a result of the mop-up activities of the CBN.

At the 182-day Treasury bill auction, the CBN offered N35-billion worth of bills; N11.1-billion was initially subscribed, while a total of N23.8-billion was underwritten by Money Market Dealers (MMDs). A total of N10-billion worth of maturities was repaid. The bill was issued at a discount rate of 7.65 percent from the previous week’s rate of 7.50 percent, representing an increase of15 basis point.

This is also in continuation of the mop-up activities of the apex bank.

At the CBN Reverse Repo of 7-day tenor, a total of N10-billion worth of bills was allotted at a discount rate of 5.76 percent.

At the secondary segment of the government securities market, the market was not very active last week as few tenor-day bills were on offer. At the 99-day tenor bill, a total of N49-billion worth of bills was sold at a discount rate of 7.25 percent.

The 167-day tenor bill was also on offer with bills worth N50-billion on offer and N16-billion on bid at a discount rate of 10.05 percent.

At the foreign exchange auctions held last week, the CBN offered a total of $100-million, the same as the previous week’s figure. Marginal rate, however, stood at N118.17/$1.

The value of naira appreciated significantly last week in the official and the parallel markets, while it depreciated in inter-bank market. The official market and parallel market rates appreciated significantly by 371 kobo and 200 kobo to close the week at N118.17/US$1, and N124.00/US$1 from the previous week’s figure of N121.88/$1 and N126/US$1, respectively.

While at the inter-bank market the rate depreciated by 27 kobo to close at N119.42/$1 from the previous week’s figure of N119.15/$1.