Lending rate at Nigeria’s interbank on Friday rose to about 15% from the 5% recorded last week. This was after commercial lenders made payment for dollar and Treasury bill purchases, thereby bringing down liquidity, traders told Reuters.

“The interbank rate traded above the 40% level on Wednesday because of the treasury bill auction,” a trader said adding that the rates later fell after the Central Bank paid matured bills worth N65 billion ($188 million). According to the traders, the apex bank this week sold dollars twice, making the liquidity of the local currency drop. It also sold N25.67 billion ($74 million) in treasury bills, which further boosted borrowing costs.

However, traders expect borrowing costs to rise next week, as the central bank is likely to continue its forex interventions to stabilize the naira.

Since February, CBN has been selling dollars in a bid to manage liquidity shortfall and reduce the gap between the official and black market exchange rates for naira.

Anita Fatunji