March 21, 2014 / 4:21 PM / 4 years ago

Nigeria interbank rate eases on bond maturity, budget disbursal

LAGOS, March 21 (Reuters) - Nigerian interbank lending rates fell 8.59 percentage points to an average of 10.41 percent on Friday, from 19 percent last week, after a liquidity boost from matured bonds and budget disbursals reached the banking system.

The central bank paid 300 billion naira ($1.82 billion) to retire matured bonds on Wednesday, in addition to the disbursal of government budget allocations and cash call payment to joint oil production partners by state energy company NNPC.

Dealers said the cash balance that lenders hold at the central bank opened at 527.21 billion naira in surplus on Friday, compared with 158 billion naira a week ago.

“We see rates stable at the present level ... but the outcome of the central bank’s policy meeting next week could alter liquidity,” one dealer said.

Nigeria’s central bank is likely to maintain a tight monetary policy at its next interest-rate meeting on Tuesday, to curb liquidity in Africa’s second-biggest economy and support its currency.

Last week, the cost of funds shot up sharply to 19 percent for overnight placement after Nigeria’s Deposit Insurance Corporation charged lenders about 100 billion naira for insurance premiums against bank deposits.

The secured Open Buy Back eased to 10.25 percent, from 18 percent last week, 1.75 percentage points below the central bank’s benchmark rate of 12 percent.

The overnight placement and call money fell to 10.50 percent each on Friday, compared with 19 percent and 20 percent, respectively, last week. ($1 = 164.60 Naira) (Reporting by Oludare Mayowa; Editing by Chijioke Ohuocha, Larry King)

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