Overnight naira interbank lending rate stayed ultra-high on Friday, quadrupling from 6.26 percent since Wednesday as the central bank took steps in the debt and currency markets to try to prop up the ailing local currency.
The naira hit all-time low of 353.75 to the dollar on Thursday.
The central bank sold dollars on Thursday and Friday, traders said. It also sold about 236 billion naira ($776 million) of open market operations (OMO) treasury bills on Thursday, which sent the banking system into a deficit of around 39 billion naira on Friday.
"Liquidity has been tight because of the successful mopping up exercise by the central bank, which sent the market into repo" one dealer said.
Those combined operations pushed the naira up 5.2 percent to 308 per dollar, but also sent the overnight interbank rate soaring to 25 percent on Friday, having hit 22 percent the previous day.
Traders said the central bank also debited commercial lenders accounts for the purchases of bonds and primary market treasury bills auctioned on Wednesday, which added to the shortage of naira in the market.
Traders said interbank rates should ease by next week when part of July's budget allocation should enter the banking system.
Nigeria distributes revenue from crude exports every month among its 36 states, and local and federal administrations.