Nigerian overnight lending rate more than doubles on cash withdrawal

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LAGOS Feb 17  – Nigeria’s overnight lending rate more than doubled to 25 percent on Friday from 10.17 percent on Thursday after the central bank sold open market bills and debited commercial lenders for bond purchases.

The central bank sold 178.44 billion naira ($586.01 million) in 321-day treasury bills at 18.6 percent and 19.14 billion naira of 174-day paper at 18 percent, draining cash from the money market and pushed up cost of borrowing among commercial lenders, traders said.

It also debited commercial banks accounts for the purchases of 160 billion naira worth of long tenor bonds and 202.4 billion naira in treasury bills sold at auctions on Wednesday, leaving the market with little cash for transactions.

Nigeria has raised 160 billion naira in local currency bonds at its second debt auction this year and 202.4 billion naira treasury bills at another auction same Wednesday.

By Thursday, the money market had a cash surplus of about 83.89 billion naira compared with 55.07 billion naira a week ago. However, about 120 billion naira in treasury bills is expected to mature and repaid next week.

Reuters

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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.

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