The interbank lending rates climbed to an average of 10.87 percent this week, from 10.5 percent last week, after payment for bond purchases sucked liquidity out of the banking system.
Nigeria issued 85.17 billion ($522.8 million) in 3-year and 10-year bonds, putting pressure on available cash deposits.
The cash balance that lenders hold at the central bank fell to a surplus of N349 billion on Friday, compared with N535 billion a week earlier.
“There was a cash squeeze today due to funding for bond purchases,” one dealer said.
The open buy-back (OBB) rose to 10.75 percent, compared with 10.25 percent and 1.25 percentage points below the central bank’s benchmark rate of 12 percent.
Overnight placement rose to 11 percent this week, from 10.50 percent last week. Dealers said the Financial Market Dealers Association abolished call money, with trading now between overnight placement and OBBs backed by treasury bills.
Dealers say OBB rates should slip back to around 10.25 percent next week, when monthly budget allocations to government agencies are disbursed.
