Nigeria’s overnight interbank rate was quoted at a record high of 150 per cent on Tuesday, two days after lenders placed funds with the central bank to participate in last Friday’s currency forward auction, traders said.
Reuters revealed that few deals were done on Tuesday due to a shortage of naira on the money market, with lenders loath to place funds among themselves until the result of Friday’s currency auction was published.
The central bank last week held a two-month dollar forward auction to clear a backlog of demand from airlines, manufacturers and other companies, as the currency crisis deepened. It later directed lenders to re-submit bids again on Monday, traders said.
Traders said rates spiked because lenders were barred from central bank’s repo window before any currency auction and they had naira funds locked away with the regulator on the day of the auction to pay for the dollars which they expect to receive in two months’ time. The central bank was yet to announce result of the auction.
“Most banks are not quoting rates because they are still waiting for the result of the FX auction,” one trader said.
The regulator 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.
Overnight rates closed at 128 per cent on Monday after they opened at 100 percent, up from 14 per cent on Thursday.
The money market ended with no deals on Friday as lenders held onto naira to be able to participate at the auction.
Meanwhile, the naira sustained its appreciation on the parallel FX market as it closed yesterday at N453 to the dollar yesterday, stronger than the N455 to the dollar it closed the previous day.
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