Nigeria’s overnight lending rate dropped to 12 per cent on Friday after the earlier sharp rise by almost 100 per cent on Wednesday due to a liquidity squeeze, as lenders paid for hard currency and treasury bills purchased from the Central Bank of Nigeria (CBN).
Reports suggest that money market rates had moderated on Thursday after the Federal Government disbursed N224.54bn ($715.10m) in budget allocations to the three tiers of government, thereby boosting liquidity.
The CBN also repaid around N95.7bn in matured treasury bills, to boost liquidity.
Following this, the CBN sold around N26.90bn at an open market treasury auction on Friday to soak up naira liquidity. Traders said the money market remained liquid despite the auction.
Meanwhile, the Nigerian naira is seen appreciating marginally both on the investors’ foreign exchange window and on the black market as dollar liquidity rises on the back of offshore inflows.
The naira gained to 364 to the dollar on the black market on Friday compared with 365 last week. It was quoted at 366.79 per dollar for investors. On the official market window it traded at around 305.90 against the dollar.
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