Overnight interbank lending rates leap to double digit on Thursday, March 25, as the Central Bank of Nigeria recalled about N400 billion from the banking system to meet the new CRR on deposits.
Traders said the open buy-back (OBB) and overnight rate were quoted by banks at 20 per cent compared with 6.75 per cent and 7.33 percent at the close on Wednesday due to banks scrambling for funds.
By the close of trading yesterday, overnight Nigeria Inter Bank Offer Rate (NIBOR) stood at 13.63 per cent up from 7.4258 per cent which it had risen to on Wednesday. One month rate also rose to 10.2818 while 3- and 6-months rates soon at 11.8876 and 13.0042 per cents respectively.
On Tuesday, the MPC raised benchmark interest rate from 11 to 12 percent, and the cash reserve ratio for commercial banks to 22.5 percent from 20 percent, to try to curb rising inflation.
“We have had major funds placers in the market quoting between 20 and 25 per cent for overnight placement, while takers are quoting between 7 and 10 percent,” one dealer said, adding that no deals had yet been done on the rates being quoted.
Traders said there was additional cash outflow for premium payments to the Nigerian Deposit Insurance Corporation (NDIC), which further put pressure on liquidity in the system and forced lending rates up.