LAGOS May 26 Nigeria's stock index rose to its
highest level in 10 months on Friday, lifted by gains in the
banking sector as overnight lending rates eased after central
bank cash injections into the banking system.
The index rose by 2.1 percent to 29,064 points
on Friday, its highest level since July last year, lifted in
particular by gains in First Bank Holdings, which rose
the maximum 10 percent.
The rally has helped pushed the index above 29,000, a
milestone for investors, and erased year-to-date losses. Over
the course of 2016, stocks fell 6.2 percent.
Other gainers include pan-African banking group Ecobank
, up 5 percent, while Guaranty Trust Bank
was up 5 percent, Zenith Bank gained 4.99 percent
and Dangote Cement rose 2.33 percent.
Overnight placement dropped to around 12.5 percent on Friday
from 26 percent last week as banking system liquidity rose. That
was spurred by the government distributing roughly 200 billion
naira ($657.03 million) in budget allocations to states. The
central bank also refunded 131 billion naira in matured treasury
bills to lenders.
Nigeria, Africa's biggest economy, distributes revenue from
its crude exports among its three tiers of government - federal,
state and local. A portion of state and local government
revenues passes through the banking system.
"The market was short of about 21.62 billion naira on
Thursday, but with the injection of cash by the central bank,
liquidity positions were reversed to positive, which helped to
push down the cost of borrowing," one senior currency trader
The interbank rate, which reflects the level of naira cash
liquidity in the banking system, is expected to rise again next
week as the central bank resumes its intervention in the foreign
exchange market, traders said.
($1 = 304.40 naira)
(Reporting by Oludare Mayowa; Editing by Paul Carsten and Susan