Nigerian interbank rates rise on tightening liquidity

Nigerian overnight lending rates rose to 11.25 percent on Friday compared with 8.25 percent last week after local currency liquidity tightened following purchases of Treasury bills and foreign exchange, traders said.

Market liquidity dropped to about 260 billion naira ($1.31 billion) credit by Thursday compared with 400 billion naira last Friday, according to dealers.

Nigeria sold a total of 254.96 billion naira of debt against bids worth 318.58 billion naira.

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 percent 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 said.

Nigeria's central bank requires commercial lenders to set aside 75 percent of public sector and 15 percent 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 95 billion naira by selling sovereign bonds with maturities ranging between 5 and 20 years on March 11.