Interbank lending rate rises on tight liquidity

Nigeria’s interbank lending rate rose to around 15 per cent weekend from five per cent last week after commercial banks paid for dollar and treasury bill purchases, draining liquidity, bank treasurers said.
Central Bank of Nigeria CBN, sold dollars twice within the week, thereby tightening Naira liquidity, bank foreign exchange dealers said. It also sold N25.67 billion in treasury bills on Wednesday, which further pushed up borrowing costs.
“The interbank rate traded above the 40 per cent level on Wednesday,” because of the treasury bill auction. Bankers said rates later dropped sharply after the central bank repaid matured bills worth N65 billion.
Borrowing costs are expected to rise in the coming week, since the central bank may keep up its forex interventions to stabilise the local currency.