Nigerian overnight rate soars to 95 %, near record - CNBC Africa

Nigerian overnight rate soars to 95 %, near record

Western Africa

by Reuters 0

The central bank sold 115 billion naira of debt in a bid to tighten liquidity. PHOTO: aim

This comes after the central bank sold Treasury bills to mop up liquidity and enforced a cash reserve requirement for lenders, dealers said.

Amid a squeeze on the naira, the rate commercial banks charge other banks for borrowing on the interbank market jumped to 95 per cent, from 20 per cent on Thursday.

(READ MORE: Electronic trade in Nigeria naira halted for second time)

Overnight rates climbed to a record high of 100 per cent on Tuesday after the central bank soaked up liquidity to support the naira currency, which fell through the psychological 200 mark for the first time this week.

The central bank sold 115 billion naira (575 million dollars) of debt in a bid to tighten liquidity in support of the local currency by draining cash and pushing up lending rates.

(READ MORE: Nigerian central bank chief pleads for calm as naira tumbles)

Traders said the state-owned energy company, NNPC, also recalled a portion of its deposits with banks, putting further pressure on liquidity.

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