THE interbank lending rate rose to close at 11.5 per cent over the weekend, up from seven per cent as payments for bond and treasury bills purchases drained liquidity from the money market, traders said.
Last Wednesday, Nigeria raised N214.95 billion ($704 mln) from local currency bonds at its first auction this year, with payment for the bonds due on Friday. Traders said the lending rate jumped at the weekend as some banks scrambled for cash to pay for bonds and treasury bills. The naira weakened slightly at the open in the unofficial market to 498 to the dollar against 497 previously as inadequate greenback supply pressured the local currency.
The local currency, however, closed flat at the official interbank window at 305.50 to the dollar, the level it has traded at since August last year.
Travelex, an international money transfer firm, sold around $20 million to 2,500 bureaux de change operators last Thursday at $8,000 each, but the supply was not enough to calm the market, traders said. The bureau de change operators quoted their official selling rate at 399 to the dollar.
The government has been pressing retail operators to narrow what it says is a damaging gulf between the naira’s official rate and the unapproved open retail market.
“We see the interbank rate drop below the double-digit this week on anticipation of budgetary disbursal to government agencies,” one trader said. Traders said the local currency might firm a bit as international money transfer agents plan to sell another round of dollars to the bureau de change operators next Thursday.
