The nation’s overnight interbank lending rates fell further on Monday to 4.25 per cent, almost two weeks after it rose significantly to 13 per cent.
The overnight placement had risen sharply to around 13 per cent about two weeks ago after the Central Bank of Nigeria withdrew about N400bn from the banking system to meet a new Cash Reserves Ratio on deposits.
Before dropping to five per cent on Friday, the interbank rate had gradually come down from the 13 per cent high.
The CBN’s Monetary Policy Committee had about two weeks ago raised its benchmark interest rate from 11 to 12 per cent, and the CRR for commercial banks to 22.5 per cent from 20 per cent, in order to curb rising in inflation and interest rates. The market closed at 13 per cent two weeks ago after cash payments from international oil companies operating under a joint-venture agreement with the Federal Government hit the system.
The total commercial lenders’ credit balance with the CBN rose to N564.35bn, up from N320.9bn last Friday.
Traders said the central bank floated N50bn in 209-day OMO bills on Friday, but was yet to release the auction results.
They expect to see interbank rate inching up slightly this week as banks make provisions for foreign exchange purchases and possible sales of more OMO bills by the CBN.
The interbank rate reflects the level of naira cash liquidity in the banking system.
The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the current market situation might linger for some days because of the slowdown currently facing the economy.
“There are challenges facing the economy now and we don’t expect any major changes in the economic situation for now,” he said.