Overnight interbank rate rises to 90%

Overnight interbank rate rises to 90%

By BusinessNews Staff on April 16, 2015

The overnight tenor of the Nigerian Interbank Offered Rates (NIBOR) spiked to 90 per cent on Tuesday, near record highs, up from 60 per cent on Monday, two days after the central bank debited lenders to enforce its cash reserve requirements (CRR).

Reuters REPORTED that rates have been rising sharply for two days – the overnight lending rate stood at 27 p

ercent on Friday last week, before the central bank withdrew the funds. Rates had reached a record high of 100 per cent in February.

“Everyone scrambling for cash … liquidity is very tight after the central bank recalled 72 billion naira,” one dealer said.

The open balance with the central bank stood at N26 billion as at Monday, down from around N160 billion last week, traders said.

The central bank, was expected to withdraw about N72 billion from commercial lenders last week, to enforce its CRR, triggering a surge in demand for funds on the interbank MARKET. The development, according to analysts made money market and interbank rates to trend higher. This was also influenced by treasury bills Primary Market Auction (PMA).

The central bank REQUIRES commercial lenders to set aside 75 per cent of public sector and 15 per cent of private sector deposits in cash in their respective accounts with the regulator.

[ThisDay]