Overnight Interbank Lending Rate Rises to 16%

By Dipo Olowookere

Nigeria’s overnight interbank lending rate, Reuters says, reached 16 percent on Friday from about 13 percent it recorded at the end of last week.

This comes as the Central Bank of Nigeria (CBN) debited commercial banks’ accounts for Dollar purchases and also issued Treasury bills to mop up liquidity.

Traders told Reuters that the regular foreign exchange auctions and the Treasury bill sales drained liquidity.

The money market opened with a cash deficit of about N2.3 billion on Friday, compared with a deficit of N45.64 billion last week.

This week, the CBN sold Dollars to clear a backlog of demand for companies and private individuals to ease pressure on the Naira.

The apex offered to sell about N40 billion in Treasury bills on Friday to further tighten liquidity.

“The tight liquidity is designed to curb demand for Dollar,” one dealer was quoted to have said.

Traders said money market rates might continue to rise next week as the central bank increases the frequency of its Dollar sale.