Nigeria overnight lending rate drops on liquidity injection

Nigeria's overnight lending rate dropped to 12 percent on Friday after spiking to almost 100 percent on Wednesday due to a liquidity squeeze as lenders paid for hard currency and treasury bills purchased from the central bank, traders said.
Money market rates moderated on Thursday after the state disbursed 224.54 billion naira ($715.10 mln) in budget allocations to its three tiers of government, boosting liquidity.
The bank also repaid around 95.7 billion naira in matured treasury bills, to boost liquidity, traders said.
Subsequently, the bank sold around 26.90 billion naira at an open market treasury auction on Friday to soak up naira liquidity. Traders said the money market remained liquid despite the auction.
One trader expected rates to rise up to 30 percent next week as the central bank issues more securities to mop up part of government disbursement from the banking system.

© Reuters News