Nigeria’s Overnight Interbank Rate Crash to 20% after FX Auction Disappoints

Nigeria’s overnight interbank rate crashed on Wednesday to around 20 percent from 150 percent after the central bank sold less hard currency than expected at a special auction, traders said.

“The central bank has released the result of the auction, but the amount sold fell short of market expectations,” one dealer said, without giving details.

The interbank rate fell after the auction as banks had now more surplus liquidity from funds not used to buy hard currency, dealers said.

Banks had been required to fund their accounts to participate in the auction, causing the cost of borrowing to soar.

Traders said the volume of the forex auction was not immediately available, adding that dollars were sold at a range of 310-350 per dollar by the central bank.

The naira closed at the official spot market at 305.25 a dollar, around the same level it has closed since August. The currency weakened a little to 455 to the dollar on the black market from 453 a dollar the previous day.


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