Interbank lending rate rise as Nigeria's central bank debit banks for CRR

Nigerian interbank lending rates rose to an average of 18 percent on Friday, up from 11.25 percent last week, driven by the withdrawal of about 242 billion naira ($1.48 billion) from the banking system by the central bank on Thursday.

CBN Abuja office

   Traders said the central bank debited accounts of banks on Thursday, in line with the new cash reserve requirement (CRR) on government deposits, which was hiked in July to 50 percent from 12 percent, in an effort to support the naira currency.
   The tightening measure is yet to have the desired impact.
   "The market reacted to the debiting for CRR on Thursday, leaving the system short on naira liquidity and pushing up lending rates," one dealer said.
   The market opened with about 79 billion naira credit balance on Friday, traders said.
   Secured Open Buy Back (OBB), overnight placement and call money closed at 18 percent each, compared with 11 percent for OBB, 11.25 percent for overnight and 11.5 percent for call, respectively last week.
   Traders said interest rates are expected to be flat until the repayment of matured treasury bills on Thursday which could ease the liquidity pressure a little by Friday.