Rampaging lending rates appear to have slowed following the closure of most businesses in the country. Pressure was also taken off liquidity following the closure of the foreign exchange (forex) official market last week.
All the tenured inter-bank rates fell considerably on resumption from the Christmas holiday yesterday, according to the Financial Market Dealers Association of Nigeria (FMDA).
Call rate fell from 15.17 percent to 14.33 percent yesterday, while the 7-day Nigerian Inter-Bank Offer Rate (NIBOR) reduced from 16.67 percent to 15.13 percent, among others.
Others include the 30-day NIBOR which fell from 16.33 percent to 15.13 percent, 60-day NIBOR came down to 16.08 percent from 16.75 percent, while that of 90-day reduced to 16.38 percent from 17.29. The 180-day NIBOR slipped to 16.75 percent from 17.67 percent, while the 360-day NIBOR reduced to 17.13 percent from 18.08 percent.
Prior to this week, available data showed that 7-day NIBOR closed the week at 16.67 percent, a four basis points increase from the previous week’s figure of 16.63 percent.
The rise in rates last week was attributed the non release of funds to the three tiers of government by the Federation Accounts Allocation Committee (FAAC) for the months of October and December.
Also, despite the N100 billion personnel and overhead costs that hit the system during the week, the amount was not enough to douse the tightness in the market as there was a total net withdrawal of aboutN335.60 billion from the system via the sales of government securities and foreign exchange auctions by the CBN during the week.
This caused the lower tenored inter-bank rates to inch up marginally to end the week. At the 91-day Treasury Bill (TB) auction, a total of N37.49 billion worth of securities was offered and sold to competitive bidders, while a total of N12.25 billion was sold to non-competitive bidders, bringing total offer and sale to N49.74 billion. The bill was 122.02 percent subscribed as N45.74 billion worth of bid was received from competitive bid.
At the 182-day TB auction, a total of N45.73 billion worth of securities was offered and sold to competitive bidders, while N11.51 billion was sold to non-competitive bidders, bringing total offer and sale toN57.24 billion. The bill was 116.58 percent subscribed as N53.31 billion worth of bid was received from competitive bidders.
At the 364-day TB auction, a total of N47.03 billion worth of securities was offered and sold to competitive bidders, while N6.52 billion was sold to non-competitive bidders, bringing total offer and sale toN53.54 billion. The bill was 114.08 percent subscribed as N53.65 billion worth of bid was received from competitive bidders.
Also, at the Open Market Operations (OMOs) and Repurchase (REPOs) transactions which held last week, there was a total inflow of about N31.92 billion into the system, while there was a withdrawal of aboutN287.53 billion from the system. This brought about a net outflow of N210.33 billion into this segment of the market.
Outside these amounts that left the system to put pressure on liquidity, sales of forex which also put pressure on scarce liquidity was absent yesterday as there was no Wholesale Dutch Auction System (WDAS).
Last week at the foreign exchange auction held on Monday, December 19, 2011, the Central Bank of Nigeria (CBN) offered a total of $200 million, while demand stood at $217.77 million, representing108.89 percent of what was offered. The total sale was the same as the amount offered, representing 91.84 percent of demand.
At the foreign exchange auction held on Wednesday, December 21, 2011, the CBN offered a total of $200 million, while demand stood at $218.08 million, representing 109.04 percent of what was offered. The total sale was the same as the amount offered, representing 91.71 percent of demand. In all a total of $400 million was offered and sold, while demand stood at $435.85 million, representing 108.96 percent of the total offer, and the amount sold was same as the amount offered, representing 91.77 percent of amount demanded.
Cumulatively, there was a net total outflow of N355.60 billion from the system through the government securities market during the week.