Nigeria's overnight naira interbank lending rate fell to around 15 percent on Friday from a peak of 35 percent on Wednesday, after the central bank injected cash from matured treasury bills into the banking system, traders said.
The cost of overnight borrowing among banks had reached 35 percent on Wednesday after cash dried up. Some commercial lenders resorted to borrowing at the central bank discount window to help meet their immediate obligations.
Nigeria has been selling dollars in the interbank forex market to support the ailing naira, and selling treasury bills to curb speculation against the local currency.
The central bank sold 139.42 billion naira of treasury bills in open market operations on Thursday at 18.5 percent, to reduce system liquidity. But the market cash balance remained up at 51.65 billion on Friday against an 87 billion-naira deficit on Wednesday.
"We expect the rate to be trading around the 15 to 18 percent level next week if the central bank did not sell fresh treasury bills to mop up cash from the system," one dealer said.
The overnight lending rate had closed last week at 16 percent but gradually climbed to 35 percent on Wednesday, then eased marginally to 20 percent on Thursday after the cash from matured treasury bills reached the system.
Nigeria's financial market will be closed for a public holiday on Monday and Tuesday and will reopen on Wednesday.
(C) Reuters News
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