Nigeria’s interbank lending rate rise to 23% on cash squeeze as CBN sells N167.6bn bills
August 4, 20171.2K views0 comments
Nigeria’s interbank lending rate rose sharply to 23 percent Friday from just five percent a week ago after the central bank tightened liquidity through sale of N167.60 billion ($459.56 million) in treasury bills and withdrew an undisclosed amount from lenders to maintain cash reserve ratio.
According to market analysts, the CBN action is to support the naira, making it scarcer in the market and more attractive to hold. The action would strengthen the currency, thereby helping to fight inflation.
Inflation in Nigeria is running at more than 16 percent annually while the country’s economy, clobbered by the low oil price has tumbled into recession over the past year.
See also: FSDH analysts expect July inflation to come in at 15.96%, but pressure remains
The local currency, the naira, has weakened from around N200 to the U.S. dollar in mid-2016 to nearly N364 on Friday, a 45 percent decline in value.
Read Also:
- Nigeria’s pension fund assets rise by N238bn in November, says PenCom
- Bullish insurance, industrial sectors see N50.3bn rise in Nigeria bourse…
- Naira down N3 at N475/$1 in street trading as T-Bills market put up…
- Nigeria: The WHEAT importation albatross
- Nigeria equities go bearish on selloffs in DangCem, AXA Mansard, UBA
The treasury bills sold Friday include 356-day open market operation bills at 18.55 percent, and 188-day paper at 17.95 percent.
The total banking credit balance opened at N75 billion, but outflows from the system led the market into negative territory, traders said.
Analysts and traders see the cost of borrowing rising further as the market struggle with tight liquidity and banks seek to cover their positions.
World
Frontpage posts
Visa to acquire ‘unicorn’ Interswitch stake for $1 billion
Deal November 12, 2019
Rig count inches lower in dramatic week for oil
Energy March 13, 2020