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Nigerian interbank lending rates climbed to 1.66 percent on average this week from 1.08 percent last week due to large cash outflows to forex and treasury bills purchases by commercial banks, traders said.

They said cash withdrawals by state energy firm NNPC from some retail banks to its central bank account also helped drain liquidity from the system.

The secured Open Buy Back (OBB) rose 45 basis points to 1.50 percent, 50 basis points above the Standing Deposit Facility (SDF) rate and 4.50 percentage points below the central bank benchmark rate.

Overnight placement and call money each climbed to 1.75 percent from 1.10 percent last week.

“The opening balance (of lenders) with the central bank fell to 226 billion naira on Friday (from 339 billion naira last week) due to funding pressure for forex and treasury bills purchases and the wihtdrawal by the NNPC,” one dealer said.

The central bank sold 96.7 billion naira in 364-day, 182-day and 91-day treasury bills this week, while it sold $339 million at its bi-weekly foreign exchange auctions.

Traders said the NNPC recalled about 50 billion naira, being local currency proceeds of the dollars it sold to some banks in the last two weeks.

Nigeria said on Friday it has distributed 704 billion naira from the central accounts to the three tiers of government — federal, state and local — for the month of July, but bankers about half of the amount is expected to hit the banking system on Tuesday to buoy liquidity.

“We expect the rates to crash immediately part of monthly budgetary allocations to state and local governments hit the system latest by Tuesday,” another dealer said.

REUTERS