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Interbank rate rises on cash shortage –

HomeNewsInterbank rate rises on cash shortage –
Interbank rate rises on cash shortage –
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Nigeria’s interbank overnight lending rate rose sharply on Friday to an average of 15 percent from 5 percent a week ago, after central bank debited commercial lenders for treasury bills purchases.

The CBN sold a total of N190 billion in treasury bills on Friday with maturities ranging from three months to one year, with yields broadly flat.

Market liquidity had opened at N167.26 billion on Friday, but the money market went into repo after the central bank sold treasury bills which significantly reduced level of cash in the banking system, pushing up cost of borrowing among banks.

“The market was trading around 10 percent for overnight placement prior to the sale of treasury bills, but rose sharply to an average of 15 percent shortly after the result of the auction was announced,” one dealer said.

Nigeria’s financial market was closed for trading from Tuesday to Thursday for a public holiday.

Traders said interest rate should open this week around same level of 15 percent but could ease a little with the expectations of injection of about N73 billion in matured treasury bills and payment of debt to government contractors.

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