Overnight Lending Rate Falls after CBN Intervention

By Modupe Gbadeyanka

The overnight lending rate in Nigeria recorded a drop of about 4 percent on Friday despite the cash injection by the Central Bank of Nigeria (CBN).

Reuters reports that the overnight lending rate depreciated to around 12 percent on Friday from 16 percent it recorded a week earlier as maturing bills and government budget disbursements pumped more cash into the money markets.

During the week, the apex bank sold around $200 million at a currency intervention to clear a backlog of Dollar demand on the official interbank market.

Traders told Reuters that the market opened on Friday with a cash balance of N9 billion against a deficit of about N2.3 billion last week.

The CBN repaid about N70 billion in matured bills on Thursday to boost liquidity.

Borrowing costs in Africa’s biggest economy reflect liquidity in the money market, which tends to lead to lower or higher rates depending on the number of borrowers.