Nigerian interbank rate rises on cash shortage – Reuters

CBN

LAGOS, July 8 (Reuters) – 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.

Nigeria sold a total of 190 billion naira ($670 million) in treasury bills on Friday with maturities ranging from three months to one year, with yields broadly flat.

Market liquidity had opened at 167.26 billion naira 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.

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