The interbank lending rates ended last week at double digits again, an indication of sustained liquidity tightening by the Central Bank of Nigeria, CBN.
The Open Buy Back (OBB) and Overnight rates had closed last weekend at 14.3%, up 83 basis points (bps) compared with the previous week’s record and 15.2 per cent, down by eight bps, compared with the previous week’s level respectively
The sustained liquidity which is aimed at curbing speculations against the Naira at the foreign exchange market and inflation, heightened in the second quarter of 2016, making banks to borrow about N4 trillion from the apex bank’s Standing Lending Facility.
The development which has led to a rise in lending rate implies that customers of banks will continue to borrow money at higher rates, while banks’ costs of meeting short term obligations on the other hand, will be rising and ultimately impact on their respective balance sheets.
This week, the situation has been projected to remain the same with the planned auction of N135.7 billion worth of Treasury Bills (T-Bills) on Wednesday, although there is going to be treasury maturity worth the same amount on the same day. But the liquidity of the maturing bills will surely not hit the system the same day.
