Overnight interbank lending rate hit a record high of 150 per cent on Tuesday, October 18 after commercial banks in the country deposited funds with the Central Bank of Nigeria, CBN to participate in last Friday’s currency forward auction.
The apex bank had on Friday held a two-month dollar forward auction to clear a backlog of demand from airlines, manufacturers and other companies, as the exchange rate crisis deepened.
According to traders, few deals were carried out yesterday due to a shortage of naira on the money market, with banks unwilling to place funds among themselves until the result of Friday’s currency auction was published. Traders said the banks were later directed by the CBN to re-submit bids again on Monday.
It was gathered that rates leaped because banks were barred from the CBN’s repo window before any currency auction. The CBN had not announced result of the auction as of Tuesday.
Overnight rates closed at 128 per cent on Monday after they opened at 100 per cent, up from 14 per cent on Thursday. The overnight interbank lending rate soared to a record high of 128 per cent on Monday on naira cash shortages after commercial banks funded their account with the Central Bank of Nigeria to participate in last Friday’s currency forward auction.
Overnight rates opened at 100 per cent on Monday, traders said, after the money market ended on Friday with no deals as commercial lenders held onto naira to be able to participate in the auction.Overnight money had traded at 14 per cent on Thursday, Reuters reports.
