Nigeria's overnight interbank lending rate eased to an average of 0.75 percent on Friday from around 3 percent midweek after the central bank let cash flow into the market from matured treasury bills, traders said.
The central bank injected around 234 billion naira ($1.2 billion) in matured opened market operations (OMO) bills on Thursday and additional refunds on cash deposited by commercial lenders for foreign exchange purchases by Friday, increasing the liquidity in the banking system.
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| Emefiele, CBN Boss |
The cost of borrowing between banks had climbed to 3 percent on Wednesday after the central bank directed commercial lenders to fund their naira accounts to enable them to take part in its forex intervention on Thursday.
The central bank intervenes once a week in the interbank foreign exchange market to provide dollar liquidity for some eligible importers.
The total commercial lenders' credit balance with the central bank is seen at around 700 billion naira on Friday because of refunds from the surplus cash deposited for forex purchases, compared with 314 billion naira last week.
The secured Open Buy Back (OBB) rate fell to 0.50 percent from 1 percent last week.
The interbank rate reflects the level of naira cash liquidity in the banking system.
"Interbank rates are seen oscillate between 1 percent and 3.5 percent next week on provisions for foreign exchange purchase and possible issuance of OMO bills by the central bank during the week," one dealer said.
*First published by Reuters
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