The nation’s interbank overnight rate fell to five per cent
on Friday from 15 per cent a week ago, as cash from maturing treasury bills and
payments by the government to contractors helped boost liquidity.
The increased cash flow left the money market with a
N267.10bn surplus balance on Friday, reversing the N300bn shortfall of a week
ago and pushing down the cost of borrowing among commercial lenders, according
to Reuters.
“There was repayment of about N115.03bn in matured treasury
bills at the Open Market Operations on Thursday, while the release of an
unspecified amount of cash payment to government contractors also boosted
system liquidity,” one dealer said. Many banks had approached the central
bank’s discount window to borrow short-term cash last week to enable them meet
obligations and ease liquidity pressures, traders said.
Traders said the expected release of capital spending by the
federal government to re-inflate the economy should inject more cash into the
money market in the coming days, which should impact positively on the
interbank rate.
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