Nigerian interbank rate up 287 bps as cbank supports naira

Nigeria's overnight interbank lending rate jumped 287 basis points to 10.87 percent on Friday as the central bank mopped up liquidity via treasury bill sales to ward off pressure on the naira, dealers said.
The naira currency has come under pressure over the past two months from falling global oil prices, dampening appetite for assets in Africa's biggest economy and chief oil exporter.
Though the central bank has been intervening this year to prop up its value, the naira has lost 7.2 percent since Jan. 2.
The bank sold more than 200 billion naira ($1.17 bln) of open market bills through the week, curbing liquidity in the market, to drive up interbank rates.
The cash balance that lenders held at the central bank opened at around 190 billion naira ($1.13 billion) in credit on Friday, down from about 500 billion naira last Friday.
"The central bank is desperately trying to stem the naira weakness and is doing everything it can ... including mopping up cash from the system," one dealer said.
Overnight rates fell to 8 percent last week after the central bank limited the volume of idle cash lenders can deposit with it, increasing market liquidity.
The Open Buy Back (OBB) climbed to 10.75 percent on Friday, compared with 8 percent last week, 1.25 percentage point below the central bank's 12 percent benchmark rate. Overnight placements traded higher at 11 percent against 8 percent last week.
Dealers expect the overnight interbank rate to increase further early next week as lenders pay for bond purchases of around 59 billion naira, but it could moderate towards the end of the week as the government revenue distribution for October hits the market.