For the third consecutive weekends, Nigeria’s overnight interbank lending rate has maintained a steady rise, hitting above two-digit percentage rise.
The rate in the months of May and part of June had hovered between 5.3 and 5.26 per cent, but jumped, hovering around 25 and 26 per cent since July and the two weeks of August.
No reason has been given by the Central Bank of Nigeria (CBN) for this apart from its statement defending its naira mop up exercise, through sale of the treasury bills, which entered its third week last weekend.
But economists said the high rise of inflation (consumer price-rise) in Nigeria, which surged from 15.6 in May to 16.5 percent in July, has been responsible for mopping up of excess liquidity in the economy.
The central bank offered about N236 billion ($776 million) of open market operations (OMO) treasury bills on Thursday, which sent the banking system into a deficit of around 39 billion naira on Friday.
Officials said part of the central bank’s steps is raise the value of the naira, which has been on constant slide against major foreign currencies, all-time low of N353.75 to the dollar last Thursday at the interbank market and N398.50 50 at the parallel market.
The combined operations of reducing the naira in circulation and daily participation in the exchange market have marginally pushed the naira up 5.2 per cent, but has sent the overnight interbank rate soaring to its 26 per cent on Friday.
It was learnt that debiting participating banks has seen them as commercial lenders account for the purchases of bonds and primary market treasury bills auctioned in last week’s deal, which started on Wednesday, as a result of shortage of naira in the market
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