March 10, 2009

Inter-banks’ lending rates hits 20.25%

Inter-banks’ lending rates has risen to 20.25 per cent from 16.91 per cent last week as banks could not get enough naira to finance their operations.

According to agency reports, lack of cash inflow caused banks to scramble for the few cash around thus giving indication for a possible rise again above 20.25 per cent next week.

The agency further noted that most of the funds that came in through budgetary allocations to government agencies two weeks ago, have dried up, and many banks could not access the central bank’s repo window as they had no treasury bills to serve as collateral.

Also, it said, payment for foreign exchange purchased at the central bank’s bi-weekly auctions had also drained liquidity from the system as the CBN sold $849 million last week.
However, the liquidity crunch was worsened by the fact that there were no repayments in matured treasury bills in the week as none was due.

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