Inter-bank rates rise as banks withdraw funds for forex funding

The rates at which banks borrow from each other called inter-bank rates yesterday rose slightly by 1.2 percent following withdrawals of money by banks to fund foreign exchange auction tomorrow.

Consequently, the Nigeria Inter-bank Offered Rates (NIBOR) yesterday increased across board to 11.77 percent from 11.64 percent the previous day.

Data available at the Financial Markets Dealers Quotation (FMDQ) website show that call tenor increased to 10.87 percent yesterday from 10.75 percent the previous day. Similarly, 7 days, 30 days, 60 days, and 90 days tenors climbed from 11.00, 11.37, 11.70 and 11.95 percent the previous day, to 11.16, 11.50, 11.83, and 12.08 percent respectively.

Victor Ofili, Research Analyst, Cowry Asset Management and Kunle Ezun, analysts at Ecobank Nigeria, all confirmed to BusinessDay on phone that there was decrease in liquidity at the money market due to pre-funding for foreign exchange two days before the forex auction at Retail Dutch Auction System (RDAS).

The Central Bank of Nigeria (CBN) had directed the authorised dealers to fund their current accounts with it two working days before the RDAS day.

Naira yesterday strengthened against the US dollar gaining N0.23k at the inter-bank market as it closed at N163.80/$ as against N164.03/$ the previous day, data from FMDQ have revealed.

The CBN on Monday offered a total of $400 million but sold a total of $322 million to 20 deposit money banks at the rate of N155.74/$ at its bi-weekly RDAS window.

External reserves as at April 7, 2014 rose by 0.06 percent to $37.972 billion compared to $37.952 as at April 4, 2014.

HOPE MOSES-ASHIKE