Nigeria’s interbank overnight lending rate fell sharply on Friday to an average of 12 per cent from around 60 percent a week ago after the central bank repaid matured treasury bills and a refund of excess cash deposited by banks to buy dollars.
The central bank sold $100 million at its special intervention auction in the foreign exchange market on Tuesday, which was less than the amount requested by banks, leading to a refund of the excess deposited by banks on Friday, Reuters disclosed.
The regulator also injected about N168 billion in matured open market operation (OMO) treasury bills into the system on Thursday, raising money market liquidity levels.
“The interbank rate is seen climbing again next week as the central bank resumes its aggressive liquidity mop up and sustains its intervention in the forex market,” a currency trader said.
The overnight lending rate jumped last week to as high as 100 percent intraday after the central bank tightened liquidity to support the naira currency.
The central bank has consistently issued OMO treasury bills to reduce excess liquidity in the money market and curb speculation on the local currency.
It sold a total of N68.79 billion worth of treasury bills on Friday in its bid to further tighten liquidity in the banking system. The bank’s sales on Friday amounted to N65.5 billion of 363-day open OMO treasury bills at 18.55 percent, and 3.29 million naira of the 174-day paper at 17.95 percent.
On the other hand, a report by Cowry Asset Management Limited showed that the NITTY moved in mixed directions across the maturities- yields on the 1month and 3 months maturities rose to 17.77% from (14.41%) and 19.45% (from 19.43%) respectively. However, 6 months and 12 months yield fell to 19.79% (from 20.36%) and 22.13% (from 22.30%) respectively.
“This week, we expect maturities via secondary market worth N14.65 billion viz: 167-day bills worth N7.976 billion and 168-day bills worth N6.674 billion. We expect further financial system liquidity ease and stability in interbank rates,” the investment firm added.