Nigeria's interbank lending rates rose to 14.25 percent on average on Friday from 9.25 percent last week, after state-owned energy company NNPC recalled some of its deposits from banks.
NNPC sells dollars to some lenders on a monthly basis and transfers a portion of the naira proceeds to its account with the central bank, leading to a rate spike.
Banks had a balance of 214 billion naira at the central bank by Friday compared with 494 billion naira last week.
In addition, cash outflows to bonds and Treasury bills purchases totalling 202 billion naira ($1 billion) negatively impacted the liquidity level in the system and caused rates to rise, traders said.
Nigeria sold bonds worth a total of 60 billion naira ($302 million) at lower yields on all tenors at an auction on Wednesday.
The secured Open Buy Back rose to 14 percent from 9 percent, higher than the central bank's 13 percent benchmark rate.
The overnight placement rose to 14.5 percent compared with 9.5 percent last week.
The liquidity level is expected to rise after the government injects money into the banking system to fund its transactions.
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