Nigerian overnight interbank lending rate spikes to record high

 

Nigeria's interbank overnight lending rate spiked further by 20 percentage points on Tuesday to 80 percent following drop in liquidity on large naira cash withdrawal by the state-owned energy company.

Dealers said NNPC withdrew more cash from the system today, hitting hard on some banks, which have to resort to borrowing heavily from other banks to cover their position.

NNPC last week sold about $300 billion naira to some lenders as part of its usual month-end dollar sales and put the naira proceeds into its account with the central bank.

The cost of borrowing among banks has oscillated between a high of 70 percent and a low of 14 percent since last month, when the central bank hiked the cash reserve requirement (CRR)on private sector deposits with commercial lenders to 20 percent from 15 percent.