Nigerian overnight lending rates rose to 11.25 per cent on Friday compared with 8.25 per cent last week after local currency liquidity tightened following purchases of Treasury bills and foreign exchange, traders said.
Market liquidity dropped to about N260 billion ($1.31 billion) credit by Thursday compared with N400 billion last Friday, according to dealers.
Nigeria sold a total of N254.96 billion of debt against bids worth N318.58 billion.
The secured Open Buy Back (OBB) rose to around 11 percent from 8 percent last week.
The secured fund was 2 percentage points short of the central bank’s 13 per cent benchmark interest rate. Overnight placement stood at 11.5 percent against 8.5 percent last week.
“We anticipate a slight increase in the cost of borrowing among banks next week because of plans to debit banks’ account for cash reserves requirement (CRR) on Thursday and cash outflow to bond issuance,” one dealer told Reuters News Agency.
Nigeria’s central bank requires commercial lenders to set aside 75 per cent of public sector and 15 per cent of private sector deposits in liquid cash in their account with it.
The regulator debit banks accounts twice every month to enforce this requirement.
Nigeria plans to raise N95 billion by selling sovereign bonds with maturities ranging between 5 and 20 years on March 11.
