Overnight Rate Spikes as CBN Drains Liquidity, T-Bills Market Trades Flat

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By Dipo Olowookere

The overnight interbank lending rate rose sharply on Friday as a result of the outflows of about N126 billion from the sale of OMO bills by the Central Bank of Nigeria (CBN).

Also the funding for retail foreign exchange (forex) by banks contributed to the spike recorded by the interbank rate.

Business Post reports that yesterday, the overnight rate rose broadly to 17.67 percent from 5.75 percent on Thursday, while the Open Buy Back (OBB) rate jumped to 16.67 percent from 5.25 percent the previous day.

It was gathered that treasury bills market was relatively flat on Friday following the OMO exercise by the apex bank.

At the close of the exercise, the central bank N7.17 billion worth of the 97-day bill at 12.60 percent, while N119.06 billion worth of the 244-day instrument was allotted to market traders at 14.40 percent.

However, both bills were not oversubscribed as witnessed on Thursday.

N100 billion worth of the 97-day bill was put for sale by the CBN, while N200 billion worth of the 244-day bill was made available to investors with N7.17 billion and N119.06 billion subscriptions received for the respective instruments.

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