Nigerian interbank rates rise on liquidity shortage

Nigeria's interbank lending rates rose sharply this week to an average of 40 percent from 14 percent last week after state-owned energy firm NNPC recalled a portion of its funds from commercial lenders.

Emefiele, CBN chief

NNPC sells dollars to commercial lenders monthly and usually withdraws a portion of the naira proceeds to deposit in its account with the central bank of Africa's top crude exporter.
The central bank's decision to have commercial lenders pay for their dollar purchases 48 hours in advance so as to curb foreign exchange demand has also contributed to the shortage of naira in the interbank, traders said.
Traders said banks' cash balances with the central bank opened at 4 billion naira ($20 million) on Friday, compared with about 80 billion naira last week.
"The market is tight and many traders had quoted an overnight rate of 70 percent earlier in the day, before it dropped to the 40 percent level," one dealer said.
Traders said the cost of borrowing among commercial lenders could reach around 100 percent early next week.
"We are expecting the disbursement of July monthly budgetary allocations to government agencies in the middle of next week but before then interbank rates could peak around 100 percent," another dealer said.
The secured Open Buy Back (OBB) and overnight placement closed at 40 percent compared with 14 percent for both the OBB and overnight placement last week.