CBN: Interbank rate rises on cash shortage
CBN: Interbank rate rises on cash shortage
By Bede
The overnight rate rose sharply week-on-week to 15 percent on Friday, from five per cent a week ago.It was learnt that the development came after the Central Bank of Nigeria debited banks for Treasury Bills purchases.Dealers said the market liquidity had opened at N167.26bn on Friday, but the money market went into repurchase agreement after the CBN sold Treasury Bills, which significantly reduced the level of cash in the banking system, pushing up the cost of borrowing among banks.“The market was trading around 10 percent for overnight placement prior to the sale of Treasury Bills, but rose sharply to an average of 15 percent shortly after the result of the auction was announced,” one dealer told Reuters.The financial market was closed for trading from last Tuesday to Thursday for a public holiday.Traders said interest rate should open this week around the same level of 15 per cent but could ease a little with the expectations of injection of about N73bn in matured Treasury Bills and payment of debt to government contractors.Meanwhile, the CBN sold a total of N190bn ($673.76m) in Treasury Bills on Friday with maturities ranging from three months to one year, with yields broadly flat, fixed income dealers said.The central bank sold N28bn of the three-month Treasury Bills at 9.98 per cent compared with 9.99 per cent at the June 22 auction, and N42bn worth of the six-month bill at 12.24 per cent against 12.30 per cent previously.The bank sold N120bn worth of the one-year paper at 14.99 per cent, the same rate as at the last auction. Discover more from Church News
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