The nation’s overnight interbank rate has risen marginally to an average of 3.5 per cent from three per cent week-on-week, data from the FMDQ website have shown.
The development followed the decline in banking system liquidity after the Central Bank of Nigeria debited banks in line with the Cash Reserves Ratio, Reuters reported quoting financial market traders said.
Traders said about N21.6bn ($108.54m) in the CRR was withdrawn by the CBN from the banking system on Thursday, sinking system liquidity and pushing up the cost of borrowing among commercial banks.
Even though the central bank sold N150.6bn in short-dated treasury bills at an auction on Wednesday, no cash left the system because the same amount of Treasury bills also matured, resulting in roll over.
“The cost of funds among banks remained fairly stable last week because of the fact that the level of liquidity in the system was considered sufficient to support transactions,” one dealer said on Sunday.