Nigeria’s Interbank Rate Drops to 12%

August 20, 2017
Interbank Lending Rate

By Modupe Gbadeyanka

Interbank overnight lending rate in Nigeria dropped sharply on Friday to an average of 12 percent from around 60 percent a week ago, Reuters is reporting.

This occurred after the central bank repaid matured treasury bills and a refund of excess cash deposited by banks to buy dollars.

During the week, the apex bank sold $100 million at its special intervention auction in the foreign exchange market, which was less than the amount requested by banks, leading to a refund of the excess deposited by banks on Friday.

The overnight lending rate jumped last week to as high as 100 percent intraday after the central bank tightened liquidity to support the naira currency.

On Thursday, the banking industry watchdog injected about N168 billion in matured open market operation (OMO) treasury bills into the system, raising money market liquidity levels.

The next day, the bank sold N65.5 billion of 363-day open OMO treasury bills at 18.55 percent, and 3.29 million naira of the 174-day paper at 17.95 percent.

The Central Bank of Nigeria has consistently issued OMO treasury bills to reduce excess liquidity in the money market and curb speculation on the local currency.

Reuters

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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