Nigeria interbank rate rises as lenders settle debt purchases

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    A trader changes dollars for naira at a currency exchange store in Lagos, Nigeria, February 12, 2015. REUTERS/Joe Penney/File Photo

    LAGOS, July 14 – Nigeria’s interbank lending rate rose to 12 percent on Friday from eight percent after bond and treasury bill purchases paid for by lenders drained banking system liquidity, traders said.

    The central bank sold 25 billion naira ($82 million) worth of 363-day treasury bills on Friday, while lenders paid for bonds bought at an auction on Wednesday.

    Money market rates stood at 15 percent last week. They dropped to 8 percent after the central bank injected 89.96 billion naira to settle matured treasury bills on Thursday.

    “We see interbank rate climbing to 20 percent at the start of next week because of expected central bank intervention in the foreign exchange market,” one trader told Reuters.

    The central bank has been using treasuries to mop-up liquidity from the banking system in a bid to also curb pressure on the currency.

    Market liquidity opened at 28.69 billion naira deficit on Thursday, traders said, narrowing the deficit which widened to 78.29 billion on Monday. ($1 = 304.95 naira)

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    Godwin Okafor is a financial journalist, Internet Social Entrepreneur and the Founder Naija247news Media Ltd He has over 16 experiences in journalism, which cuts across traditional and digital media. He started his journalism career in Business Day, Where he was a senior editorial graphic artist, before he left to start Naija247news, An Online Financial Newspaper in 2010. He has won series of awards and he is the chairman of Emmerich Resources Limited, the publisher of Naija247news.com and also sits on the board of Students In Business Awards, (SIBA).

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