NIGERIAN overnight interbank rate
rose on Friday to around 4.5 percent from
3.5 percent in the previous week, after
commercial lenders made payments
for local currency denominated bond
purchases, which drained liquidity in
the system.
Nigeria sold about N170 billion
($855.13 million) in long-tenor local
currency bonds on Wednesday, while
payment for the debt was due on Friday The central bank also sold about N63.98
billion of seven-month treasury bills at
nine percent on Thursday to further curtail
excess liquidity in the banking system.
However, N91.42 billion in matured
treasury bills was retired on Thursday,
resulting in net cash inflow of N27.44
billion into the system.
Traders said liquidity level stood around
N414 billion on Thursday, compared with
N401.7 billion last Friday, but the level
is expected to have dropped after the
payment for bonds and possible debit for
Cash Reserves Ratio, CRR, on Friday.
“We see further rise in the cost of
borrowing among banks next week
because of expected cash flows to
treasury bills and forex purchases, while
there would be no major cash inflow
into the system,” one dealer said.
Commercial lenders are expected to
make provision for foreign exchange
purchases by Tuesday, which will
further drain liquidity from the system
and push up interbank interest rate,
traders said.