By Mohammed Usman with agency report
The Nigerian interbank overnight lending rate closed at one percent on Friday, the same level last week, but down from 2.5 percent seen on Thursday after the Central Bank of Nigeria(CBN) mopped up liquidity from the banking system this week. Reuters reported traders to have said.
The CBN sold open market operation (OMO) bills worth 189.99 billion naira ($950 million) this week in a bid to reduce liquidity in the market and curb pressure on the forex market, causing cost of fund among banks to spike initially.
Traders said market liquidity dropped to around 270.49 billion naira on Wednesday from around 955 billion naira last week however, it was expected to rise on Friday before close of business as the CBN refunds a portion of money deposited by banks for forex purchase.
“Rates dropped back to one percent level on Friday as a result of expected refunds from deposits for forex purchase by the central bank before close of business,” one dealer said.
Nigeria sold 33 billion naira worth in 224-day OMO bills at 7.9 percent yield on Tuesday and again another 156.99 billion naira in 205-day bills on Thursday in its bid to reduce volume of liquidity in the banking system.
Traders said with the consistent issuance of OMO bills by the CBN, interbank lending rates are expected to gradually inch up in the coming weeks.
Meanwhile, The Association of Senior Civil Servants of Nigeria (ASCSN), has commended President Muhammadu Buhari for not yielding to pressures to devalue the naira.
Mr Alade Lawal, Secretary General of the association, made the commendation in a statement issued in Lagos on Friday.
In the statement, he contended that devaluation of the naira would increase the level of poverty in Nigeria.
The scribe said the association supported the President because as an import dependent country, there was no benefit from continued devaluation of its currency.