Nigeria's overnight interbank lending rate climbed to 16 percent on Friday from about 13 percent at the end of last week, as the central bank debited commercial banks' accounts for dollar purchases and also issued treasury bills to mop up liquidity.
The central bank sold dollars twice this week to clear a backlog of demand for companies and private individuals to ease pressure on the naira.
Traders said the regular forex auctions and the treasury bill sales drained liquidity. The money market opened with a cash deficit of about 2.3 billion naira on Friday, compared with a deficit of 45.64 billion naira last week.
The central bank on Friday offered to sell about 40 billion naira in treasury bills to further tighten liquidity.
"The tight liquidity is designed to curb demand for dollar," one dealer told Reuters.
Traders said money market rates may continue to rise next week as the central bank increases the frequency of its dollar sale.