Connect with us

Business

Banks face fresh pressure as interbank rate jumps by 20% over dollar purchase

Published

on

Banks face fresh pressure as interbank rate jumps by 20% over dollar purchase

Pressure on commercial banks in Nigeria to meet obligations on foreign exchange purchase on Friday raised the interbank lending rate by 20 per cent, hitting 70 per cent point from 50 per cent point last weekend.

This is the second time in four months that the interbank rate was forced to rise above normal 10 or 15 per cent point, as noticed in November 2016, resulting from the sharp fall in exchange rate of naira to the dollar and an acute scarcity of the hard currency at the time.

But most bankers said they had expected to have some relief on the system since there are lower pressure on dollar demands since the CBN has been pumping regularly into the market.

Reports have it that the current quest, as witnessed on Friday was aimed at banks’ attempt to offset the backlog of foreign exchange that they had bought in the past two weeks, based on the credit window offered them by the apex bank since the beginning of April 2017.

Read also: After Akinwande’s rejection, Buhari nominates Prof. Momoh as NERC chairman

It is estimated that a deficit of about N207 billion was recorded on Friday, which is an improvement of a deficit of N240 billion the previous week.

Many observers say the continued high deficit recorded weekly by banks in their bid to meet foreign exchange obligations, resulting to increase on interbank lending percentage point is a sign that the policy makers are yet to find easier way out of the forex challenges.

The apex bank said on Friday it would offer dollar forwards to offset foreign exchange obligations for manufacturers, airlines and fuel importers as part of measures to improve dollar liquidity and support the ailing naira.

Lending rate among commercial lenders which opened at 60 per cent on Tuesday, but fell to around 29.33 per cent on Thursday was said to have witnessed some stability in the system because of the maturity of some treasury bills that saw most banks with enough cash to transact their obligation, even outside forex demands.

The naira closed at 206 to the dollar on the interbank market on Friday, the same level as the previous day, while it traded at 385 to the dollar on the black market.

 

 

 

RipplesNigeria ….without borders, without fears

Click here to download the Ripples Nigeria App for latest updates

 

 

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now