Nigeria's interbank lending rates were flat at around 15.25 percent for overnight lending on Friday, even as market liquidity dropped significantly because of persistent treasury bill sales by the central bank, Reuters reports.
Traders said market liquidity should be below 100 billion naira due to consistent cash withdrawal by the central bank via treasury bill sales, although data on commercial lenders' cash balance with the central bank was not available on Friday.
Traders said the central bank had sold around 1.2 trillion naira ($3.73 billion) in open market operations (OMO) treasury bills at 14 auctions in one month in its bid to reduce liquidity in the banking system and curb pressure on the forex market.
"Market liquidity is very thin," one dealer said.
Traders said many banks have been resorting to the central bank's standing lending facility to cover their positions.
Nigeria's naira fell to an all-time low of 490 to the dollar on the parallel market early on Friday before recovering to 475 amid a dollar shortage in Africa's largest economy.
The naira closed flat at 305.25 to the dollar on the official market, the same level it has held for the last two weeks thanks to support from the central bank.
"We expect the interbank lending rate to remain at the present level next week as the central bank is expected to continue its liquidity management strategy to curb pressure on the forex market," one dealer said.