Nigeria’s overnight interbank lending rate soared to a record high of 128 per cent on Monday on naira cash shortages after the lenders funded their account with the central bank to participate in last Friday’s currency forward auction, traders said.
Overnight rates opened at 100 per cent on Monday, traders said, after the money market ended on Friday with no deals as commercial lenders held onto naira to be able to participate in the auction.
Overnight money traded at 14 per cent on Thursday.
The central bank has been tightening liquidity and intervening directly with dollar sales to commercial lenders to support the ailing naira, hit by the fall in oil prices, Nigeria’s economic mainstay.
The bank on Friday held a two-month dollar forward auction to clear a backlog of demand from airlines, manufacturers and other companies, as the currency crisis deepened.
However, it debited customers’ naira accounts on the day of the auction but will deliver the dollars in two months’ time, traders said, adding that the move had soaked up liquidity from the money markets.
The central bank intervened again on Monday with dollar sales to support the naira, which ended at 305.50 per dollar, traders said.