Nigeria’s Interbank overnight lending rate in slumped sharply on Friday, August 18, to an average of 12 percent from around 60 percent a week ago, Reuters is reporting.
This came after the Central Bank of Nigeria, CBN, repaid matured treasury bills and a refund of excess cash deposited by banks to buy dollars.
During the week, the apex bank had sold $100 million at its special intervention auction in the foreign exchange market, which was less than the amount requested by banks, leading to a refund of the excess deposited by banks on Friday.
The overnight lending rate soared last week to as high as 100 percent intraday after the central bank tightened liquidity to support the naira currency.
Last week Thursday, the CBN pumped about N168 billion in matured open market operation (OMO) treasury bills into the system, raising money market liquidity levels.
On Friday, the bank sold N65.5 billion of 363-day open OMO treasury bills at 18.55 percent, and 3.29 million naira of the 174-day paper at 17.95 percent.
The Central Bank of Nigeria has consistently issued OMO treasury bills to reduce excess liquidity in the money market and curb speculation on the local currency.