LAGOS May 19 Nigeria's overnight lending rate
dropped to 26 percent on Friday from 65 percent a day earlier
after the central bank refunded excess naira offered in an
earlier dollar sale to commercial lenders, injecting liquidity
back into the money market.
Traders said that a cash squeeze on the money markets on
Thursday after lenders provided naira to participate in a
central bank currency intervention had pushed the overnight rate
The banking system's cash balance with the central bank
stood at 24.61 billion early on Friday before the central bank
"We see rates easing further next week. We anticipate about
200 billion naira would be disbursed to government," one
currency trader said.
The central bank sells hard currency regularly on the
interbank market to boost dollar liquidity but in turn mop-up
the naira. If it does not take up all offers, the excess naira
are returned to lenders.
Mired in recession, Nigeria is grappling with a currency
crisis and dollar shortage brought on in part by the low price
of oil, the cornerstone of Africa's largest economy.
The naira closed at 305.45 to the dollar on the spot market
on Friday, and was quoted at 381 on the black market. It was
quoted at 382 per dollar at a trading window for investors.
(Reporting by Oludare Mayowa; Editing by Chijioke Ohuocha)