By Modupe Gbadeyanka
According to Reuters, Nigeria’s overnight lending rate more than doubled to 25 percent on Friday from 10.17 percent on Thursday after the central bank sold open market bills and debited commercial lenders for bond purchases.
It was reported that the Central Bank of Nigeria (CBN) sold N178.44 billion ($586.01 million) in 321-day treasury bills at 18.6 percent and N19.14 billion of 174-day paper at 18 percent, draining cash from the money market and pushed up cost of borrowing among commercial lenders.
It also debited commercial banks accounts for the purchases of N160 billion worth of long tenor bonds and N202.4 billion in treasury bills sold at auctions on Wednesday, leaving the market with little cash for transactions.
Nigeria has raised N160 billion in local currency bonds at its second debt auction this year and N202.4 billion treasury bills at another auction same Wednesday.
By Thursday, the money market had a cash surplus of about N83.89 billion compared with N55.07 billion a week ago.
However, about N120 billion in treasury bills is expected to mature and repaid next week.
Reuters.
Adedapo Adesanya