By Babajide  Komolafe
The amount of funds in the interbank money market was buoyed by inflow of N212 billion from repayment of matured treasury bills last week.

Seventy per cent of the funds was, however, reinvested in treasury bills, hence cost of funds rose slightly at the end of the week.

Result of treasury bills (government securities) issuance during the week shows that the apex bank injected N73.63 billion into OMO bills that matured on Thursday. The same day, it also injected N139.28 billion into primary market bills that matured that day.

Also on the same day, the CBN offered for sale N149 billion worth of primary market bills, obviously to mop up the injected funds from the market. It offered N32.057 billion worth of 91 days bills, and N100 billion worth of 182 days bills.

The bills offered received over 100 per cent oversubscription, as public subscription stood at N316.842 billion. Investors demanded for N53.896 billion for the 91 days bills, and N163 billion worth of 182 days bills.

For the 91 days bills, investors demanded for interest rate ranging from 13 to 16.4 per cent, while for the 182 days bills, they demanded for interest rate ranging from 14.5 to 20 per cent. For the 91 days bills, the CBN stopped at 14.7 per cent and 16.8 per cent for the 182 days bills.

The outflow, combined with N79.22 billion that was used to fund foreign exchange purchases caused cost of funds to rise slightly hence interbank interest rate closed higher for the week. Interest rate on Call, 7-Days and 30-Days lending closed at 14.92, 15.29 and 15.86 per cent respectively, up from 13.25, 13.75 and 14.21 per cent the previous week.

Meanwhile, the naira recorded its biggest gain in the interbank market in recent times as it appreciated by 165 kobo during the week. From N160.43 per dollar the previous week, the interbank exchange rate dropped to N158.80 on Friday.

The naira also gained 20 kobo at the official market, where the official foreign exchange market dropped to N156.5 per dollar from N156.7 the previous week.

The sharp appreciation of the naira was attributed to decline in demand for foreign exchange particularly for importation of petroleum products. At the bi-weekly foreign exchange auction conducted by the Central Bank of Nigeria on Wednesday, the apex bank offered and sold $450 million, 10 per cent less than $500 million offered and sold the previous week.