Business
Nigeria overnight rate falls on liquidity injection
Nigeria’s overnight lending rate fell to 9 per cent in late trades on Friday from around 21 per cent in the previous session after the central bank repaid maturing treasury bills to boost liquidity on the money market, traders said.
The central bank has kept rates high in Africa’s biggest economy to fight inflation and currency weakness and to attract foreign investors. It has been selling treasury securities almost four times a week to soak up Naira liquidity. Overnight lending rates hit 120 percent two weeks ago after a court ordered a freeze on millions of bank accounts with incomplete identity documents, and the bank sold treasury bills.
Traders said money market rates trended downwards after the monetary authority on Thursday repaid around N200 billion worth of open market bills that matured. It subsequently sold N80 billion worth of bills which was not enough to mop up liquidity. Banking system liquidity opened for trade on Friday at N71 billion in credit. Traders expect liquidity to tighten next week as the central bank continues its treasury auctions and intervention in the currency market.
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