Nigeria’s Interbank Rates Inch Up After MPR Hike

Nigeria’s interbank lending rates inched up to an average of 5.0 per cent last week from 4.92 per cent last after theCentral Bank raised its benchmark interest rate and liquidity fell, traders said.

Nigeria lifted its monetary policy rate (MPR) by 25 basis points to 6.5 per cent  and took aggressive measures to tighten liquidity as it seeks to get inflation down to single digits. Traders said the market might borrow from the Central Bank next week should liquidity fall further due to outflows for foreign exchange purchases and other transactions, in addition to the impact of the rate hike.

 The secured Open Buy Back (OBB) inched up to 4.75 per cent, 175 basis points lower than the Central Bank’s 6.50 per cent benchmark rate and 25 basis points above the Standing Deposit Facility (SDF) rate, from 4.50 per cent last week.

Both overnight and call money were unchanged at 5.0 per cent and 5.25 per cent respectively. Dealers said as part of measures to tighten liquidity, the Central Bank sold 60 billion naira in treasury bills on the secondary market on  while foreign exchange purchases also drained some cash from the system.