A combination of a large cash withdrawal by the Nigerian National Petroleum Corporation (NNPC) and tax remittance by telecom giant, MTN last week drained liquidity from the system, pushing the rates higher to an average of 15.83 percent, from 15.66 percent at the interbank market.
Agency reports at the weekend said NNPC, a major dollar supplier to the interbank market, sold about $400 million to some lenders last week and recalled its naira proceeds to its account with the central bank, while telecoms giant MTN remitted part of its corporate tax to the government, draining liquidity from the system.
“The market was very short this week because of the large cash outflows from the system and this resulted in the rates spike,” one dealer told Reuters.
Traders said liquidity was initially boosted by treasury bill repayments on Wednesday, but the market opened short on Friday with a cash deficit of about N76 billion ($468 million) due to the large outflows.
Nigeria also sold N100.62 billion worth in three and six months treasury bills, $750 million at the bi-weekly foreign exchange auction and an unspecified amount of dollars directly to some lenders, sucking cash from the system.
The secured Open Buy Back (OBB) was unchanged at 15 percent, 300 basis points above the central bank’s 12 percent benchmark rate, and 5 percentage points above the Standing Deposit Facility (SDF) rate.
Overnight placement closed at 16.50 percent, compared with 16 percent last week, while call money closed at 16 percent, the same level as last week.
“We are expecting the disbursement of May budgetary allocations to government agencies by Tuesday, which will boost the liquidity level and help ease the cost of borrowing in the market,” another dealer said.
Traders said rates would not ease significantly this week.