Lending rate falls to 50 percent
Nigeria’s overnight lending rate fell to 50 percent yesterday, from a record high of 70 percent the previous day after the central bank refunded cash to dealers who participated at a forex auction but did not win bids.
Dealers have to fund their naira account with the central bank two days in advance to be able to participate at the bank’s twice-weekly forex auction. The bank sold $199.9 million as at Monday, lower than the previous $289 million.
The balance that lenders hold with the central bank closed at a debit of 20 billion naira on Monday, compared with 45 billion naira on Friday. The banking system was about 400 billion naira in credit two weeks ago.
Naira shed almost 1 percent in early trade yesterday amid a shortage of liquidity, after the market soaked up a central bank intervention on the previous day that was not sufficient to quell demand for dollars, dealers said.
The currency traded at 184.28 to the dollar at the morning hour, having opened at 182.60.
On Monday the central bank sold $199.9 million at 168 naira at its regular forex auction, lower than the $289 million it sold at the last auction a week ago, dealers said, pushing additional demand for dollars to the interbank market.