Nigerian interbank lending rates fell to an average of 4.92 percent this week from 9.25 percent last week as budgetary allocations to the three tiers of government boosted liquidity, traders said on Friday.
Traders said the cost of borrowing would likely remain stable next week because of expectations of further disbursals for public sector wages and personnel costs.
The secure Open Buy Back (OBB) dropped to 4.50 percent, 175 basis points lower than the central bank's 6.25 percent benchmark rate and 25 percentage point above the Standing Deposit Facility (SDF) rate, from 8.25 percent last week.
Overnight placement fell to 5.0 percent from 9.50 percent, while call money traded at 5.25 percent compared to 10 percent last week.
Traders said the market opened with a balance of about 241 billion naira in accounts with the central bank on Friday. Liquidity was raised by the large inflows from the budget disbursals, which hit the system on Wednesday.
We're expecting about 105 billion naira would be debited for foreign exchange and bond purchases by the close of market today (Friday) but the system would still be liquid enough next week to support transactions, one dealer said.
Africa's top oil producer issued 70 billion naira in bonds on Thursday and sold about $650 million at its bi-weekly foreign exchange auction this week.
Traders said the overnight rate could inch up to around 6.0 percent next week, but anticipated inflows for public sector wages and personnel costs would ensure the system remained sufficiently liquid and the cost of funds remained range bound.