LAGOS, Nov 10 (Reuters) - Nigeria’s overnight lending rate fell to 9 percent in late trades on Friday from around 21 percent in the previous session after the central bank repaid maturing treasury bills to boost liquidity on the money market, traders said.
The central bank has kept rates high in Africa’s biggest economy to fight inflation and currency weakness and to attract foreign investors. It has been selling treasury securities almost four times a week to soak up naira liquidity.
Overnight lending rates hit 120 percent two weeks ago after a court ordered a freeze on millions of bank accounts with incomplete identity documents, and the bank sold treasury bills.
Traders said money market rates trended downwards after the monetary authority on Thursday repaid around 200 billion naira worth of open market bills that matured.
It subsquently sold 80 billion naira worth of bills which was not enough to mop up liquidity. Banking system liquidity opened for trade on Friday at 71 billion naira in credit.
Traders expect liquidity to tighten next week as the central bank continues its treasury auctions and intervention in the currency market. (Reporting by Chijioke Ohuocha, editing by Ed Osmond)