Nigerian interbank interest rates eased to 7.33 percent on average this week from 9.41 percent last week despite big cash outflows to purchase foreign exchange and investment in treasury bills, traders said on Friday. The secured Open Buy Back (OBB) closed dipped to 7.0 percent from 8.5 percent, overnight placement dropped to 7.5 percent from 9.75 percent and call money fell to 7.5 percent from 10 percent. Bankers said rates fell below 7.0 percent across board on Monday following cash inflows from budgetary allocations to the three tiers of government, but climbed in the week after a huge withdrawal by the state oil firm NNPC and a cash mop-up by the central bank.

 "There were huge inflows from budgetary allocations on Monday, which helped pushed rates down, but this was short-lived due to a massive mop-up by the central bank and a big cash withdrawal by the NNPC," one banker said. Most banks had adjusted their rates downward last week in anticipation of the release of about 439 billion naira in monthly allocations to the federal, state and local governments from the central account. The funds were disbursed last Friday and on Monday. Nigerian banks depend largely on the monthly disbursement of public sector funds to finance their operations, while the central bank often increases treasury bills sales to control money supply. The rates are likely to climb next week because there will be no fresh cash injection into the system, while investment in treasury bills and other outflows could further reduce the level of liquidity in the system, bankers said.