Overnight Lending Rate Falls as T-Bill Payments Inject Cash

Nigeria's overnight interbank lending rate fell to 14 percent on Friday from 22 percent last week after the central bank repaid matured treasury bills, injecting cash into the banking system, traders told Reuters.

Traders said the bank injected around 140 billion naira ($444.98 million) through its pay-out of matured open market operations bills, which helps lower borrowing costs among banks.

The cash helped money-market liquidity, traders said, despite bond and treasury bill sales this week. The debt office raised 39 billion naira with local currency bonds and 120 billion in short-dated treasury bills this week .

The overnight lending rate had risen earlier this week to peak at 30 percent on Wednesday due to tight liquidity. It fell on Thursday following cash injections from matured treasury bills.

Traders expect borrowing costs to rise slightly next week as liquidity drains away.