The interbank lending rates climbed 6.5 percentage points on Friday to 15.75 percent on average from 9.25 percent last week, after the central bank debited commercial lenders’ account to meet the banks’ cash reserves requirement (CRR) this week.
Traders said the Central Bank of Nigeria (CBN) withdrew about N167 billion ($861.7m) on Wednesday, draining liquidity.
Read also: With African fashion in vogue, home talent shines
The CBN requires commercial lenders to set aside 75 percent of public sector and 15 percent of public sector deposits in liquid cash in their account with it. The regulator debit banks accounts every months to enforce this requirement.
Banks’ cash balance with the central bank dropped to about 64.6 billion naira on Friday, compared with 393 billion naira last week.
“We see rates rising further next week due to anticipation of further liquidity drain from NNPC (the state-owned energy company) cash withdrawal and funding for bond sales,” one dealer said.
