Nigerian interbank rates rise on cash shortage

LAGOS Fri May 16, 2014 11:30am EDT

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LAGOS May 16 (Reuters) - Nigerian interbank lending rates rose to an average of 12.41 percent this week from 10.25 percent last week after the central bank issued 200 billion naira treasury bill to soak liquidity from the system.

Traders said the central bank mopped-up cash from the system in the week to reduce liquidity pressure on the value of the naira.

The local currency was trading at 162.20 to the dollar on Friday, broadly flat from 162.45 at close the previous day.

The cash balance that lenders hold at the central bank opened on Friday at 350 billion naira compared with 599 billion naira last week.

The open buy back (OBB) was unchanged at 12.25 percent, 1.75 percentage points below the central bank's benchmark rate of 12 percent.

The overnight placement and call money climbed to 12.50 percent respectively from 10.25 percent each last week.

"We expect interbank lending rates to take a cue from the outcome of Monetary Policy Committee (MPC) meeting next week," one dealer said.

The central bank MPC meet's on Tuesday with traders, however, expecting no major decision shift on interest rate. (Reporting by Oludare Mayowa; Editing by Bate Felix)

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