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Naira Scarcity at Banks Pushes NIBOR Northwards

By Dipo Olowookere

The Nigerian Inter-bank Offered Rate (NIBOR), which represents the short-term lending rates of selected banks in the Nigerian inter-bank market, appreciated last week as a result of shortage of Naira in the system.

Also, the hike in the rates was partly caused by banks’ unwillingness to lend to one another as the standing deposit facility, N326.45 billion, was significantly higher than the standing lending facility, N16.79 billion.

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According to analysts at Cowry Asset, NIBOR for overnight, 1 month, 3 months and 6 months tenor buckets rose to 22.38 percent from 6.86 percent, 14.40 percent from 13.09 percent, 14.58 percent from 13.47 percent and 15.35 percent from 14.31 percent respectively.

During trading last week, the Central Bank of Nigeria (CBN) auctioned treasury bills worth N133.49 billion via the primary market.

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However, the stop rate for the 91-day bills fell to 10.09 percent from 11 percent as did the stop rates for both 182-day and 364-day maturities to 12.09 percent from 12.20 percent and 13.33 percent from 13.48 percent respectively.

The outflows at the last Wednesday’s PMA were offset by the inflows from the matured T-bills worth N401.71 billion the next day.

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Meanwhile, NITTY moved in mixed directions across maturities tracked: yields on 1 month and 3 months rose to 12.72 percent from 12.40 percent and 12.66 percent from 12.51 percent respectively.

However, yield for 6 months and 12 months maturities fell to 13.19 percent from 13.21 percent and 14.93 percent from 14.95 percent respectively.

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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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