Nigeria interbank rate jumps on cash payments for bond purchases

0
1096
Nigerian naira notes are seen in this picture illustration March 15, 2016. REUTERS/Afolabi Sotunde/Illustration/File Photo - RTSFNNR

LAGOS Jan 20  – Nigeria’s interbank lending rate rose to close at 11.5 percent on Friday, up from 7 percent last week as payments for bond and treasury bills purchases drained liquidity from the money market, traders said.

On Wednesday, Nigeria raised 214.95 billion naira ($704 mln) from local currency bonds at its first auction this year, with payment for the bonds due on Friday.

Traders said the lending rate jumped on Friday as some banks scrambled for cash to pay for bonds and treasury bills.

The naira weakened slightly at the open in the unofficial market to 498 to the dollar against 497 previously as inadequate greenback supply pressured the local currency.

The local currency, however closed flat at the official interbank window at 305.50 to the dollar, the level it has traded at since August last year.

Travelex, an international money transfer firm, sold around $20 million to 2,500 bureaux de change operators on Thursday at $8,000 each, but the supply was not enough to calm the market, traders said.

The bureau de change operators quoted their official selling rate at 399 to the dollar on Friday.

The government has been pressing retail operators to narrow what it says is a damaging gulf between the naira’s official rate and the unapproved open retail market.

“We see the interbank rate drop below the double-digit next week on anticipation of budgetary disbursal to government agencies,” one trader said.

Traders said the local currency might firm a bit as international money transfer agents plan to sell another round of dollars to the bureau de change operators next Thursday.

SHARE
Previous articleGOC 82 Visits Formations and Units
Next articleEXCLUSIVE: Malaria champions see Trump uncertainty at crucial time
Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.