Nigerian interbank rate drops as liquidity persists

Nigeria's overnight interbank rate rose to an average 4 percent on Friday, up from 3 percent previously, as the central bank's attempt to mop up excess liquidity from the banking system faltered.
Traders said the central bank failed to sell treasury bills at its open market operation (OMO) window twice in the week because commercial lenders were asking for higher returns than the bank was willing to offer.
The central bank however, sold 206-day bills worth 93.18 billion naira on Monday, and also retired 129.61 billion naira of matured OMO bills, leaving the system with more cash.
Total banking system liquidity stood at 401.72 billion naira on Thursday, slightly lower than 408.25 billion naira last week, dealers said.
"We expect rates to trade lower next week if the promise of the government to release capital project funding next week is anything to go by," one dealer said.