Nigeria's central bank has sold about 283 billion naira ($877.11 million) worth of treasury bills to mop up liquidity, driving up interbank lending rates, traders told Reuters on Friday.
Overnight lending rates rose to 20 percent after the bills was sold but later dropped to 16 percent towards the market close because the banking system was still in credit to the tune of around 17.44 billion naira.
"We expect the market to open in the negative next week, given the volume of OMO bills sold, while the interbank lending rate is seen within the 18-20 percent range," one dealer said.
The bank had earlier repaid 160.64 billion naira worth of matured bills but sold a higher amount to drain liquidity, traders said.
It sold the one-year bill on Friday at a rate of 18.5 percent.
In September, the central bank sold Open Market Operations (OMO) bills to soak up about 1.2 trillion naira, in a bid to curb speculation against the currency and shore up fixed income yields to attract investors.
The central bank has said it will keep interest rates tight to attract foreign currency and resolve a chronic dollar shortage brought on by a slump in oil prices.