Nigeria Interbank Rates Stay Flat As CBN Cancels T Bill Sale

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Nigeria’s interbank lending rates remained unchanged at 10.37 percent for the fourth week on Friday after the Central Bank of Nigeria (CBN) cancelled the sale of fresh open market (OMO) bills as investors demanded higher yields.

The CBN had offered to sell treasury bills in the week, but withheld the auction due to demand for high yields by investors as the risk of holding Nigerian assets has risen with falling oil prices and a weakening naira currency, dealers said.

Instead it repaid 170 billion naira ($1.03 billion) worth of matured OMO bills this week, increasing interbank liquidity. Banks were also expecting monthly government revenue disbursements to hit the system from next week.

The cash balance that lenders held at the central bank opened around 389 billion naira on Friday, down from 431 billion naira last week.

Nigeria’s debt office sold 171.26 billion naira worth of treasury bills with the six month and one year paper fetching higher yields than at a previous auction on Sept. 24.

The open buy back rate was unchanged at 10.25 percent this week, 1.75 basis points below the central bank’s benchmark interest rate of 12 percent.

Overnight placements also remained flat at 10.50 percent for the forth consecutive week.

Dealers expect interbank lending rates to remain flat next week as more liquidity flows into the banking system.

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