Punch||The Nigerian interbank lending rate spiked 7.75 percentage points on Wednesday to 18 per cent for overnight placement ahead of the Central Bank of Nigeria’s withdrawal of about N750bn ($5bn) to enforce a new cash reserves rules on public sector deposits.
The CBN had two weeks ago raised the Cash Reserve Requirements for banks to hold government sector deposits to 75 per cent, from 50 per cent, in a bid to tighten liquidity and support the weakening naira.
According to a Reuters report, fund providers were quoting higher rates on short tenor placements on Wednesday, dealers said as they were expecting the central bank to tighten liquidity before the close of market.
Overnight placement was 10.25 per cent the previous day.
“Rates have suddenly jumped because of the signal … to debit banks’ accounts, though the money has yet to be debited,” one dealer said.