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NNPC pressures interbank rates with N152 bn withdrawal

By Babajide Komolafe

Interbank interest rate came under pressure on Friday as market experienced outflow of N152 billion occasioned by monthly withdrawal by Nigeria National Petroleum Corporation (NNPC).

Consequently, cost of funds for short-term funds namely: Overnight lending, 7-Days lending and Secured Open Buy Back (OBB) lending rose slightly. Data from Kakawa Discount House indicate that interest rate on Overnight lending rose to 9.5 per cent at the close of business on Friday from 9.0 per cent the previous week. Also, interest rate on OBB rose to 8.5 per cent from 8.25 per cent.

Despite the withdrawal, investigation reveals that the market is quite liquid with cash and hence the increase might not extend to this week notwithstanding outflow of N70 billion for purchase of FGN Bond to be issued by the Debt Management Office.

On the foreign exchange side, in spite of sharp increase in foreign exchange demand, the naira appreciated in both official and interbank segments of the market. The naira appreciated by 42 kobo at the official market while it appreciated by 16 kobo at the interbank market.

At the Wholesale Dutch Auction System (WDAS) sessions conducted by the Central Bank of Nigeria (CBN), demand for foreign exchange rose by 44 per cent to $724.17 million from $502.71 million.

The amount sold however, only rose by 19.5 per cent to $550 million from $460.38 million. The official exchange rate nevertheless dropped to N150.08 per dollar from N150.5 the previous week. The interbank exchange rate also dropped to N152.39 per dollar from N152.5 the previous week.


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