Nigerian overnight lending rates fell to an average 25 percent on Friday from a record high of 95 percent last week after the central bank retired about 100 billion naira in Treasury bills, dealers said.
Traders said the repayment of matured Open Market Operation Treasury bills provided some liquidity in the market but not sufficient to lower the rates further because the cash was used up by banks to buy Treasury bills and foreign exchange.
The secured Open Buy Back and Overnight rates fell to 25 percent each from 95 percent previously.
Nigeria sold about 142 billion naira in Treasury bills with maturities ranging between 3-month and 1-year this week.
Banks' cash balance with the central bank stood at around 4.8 billion naira credit on Friday, compared with a deficit of around 25 billion naira on Monday, traders said.
"We expect an increase in cash flow into the system next week because of possible disbursal of budgetary allocation for January to government agencies, and rates should fall below the 20 percent level," one dealer told Reuters.
Meanwhile, the naira on Friday depreciated by N5 to the dollars as it traded N215 at the Bureau De Change (BDCs) segment of the official market. It also depreciated by N7 at the black market, selling at N217 to the dollar.
A dealer, who preferred anonymity, told the News Agency of Nigeria (NAN) in Lagos that the depreciation might be due to the closure of the Retail Dutch Auction System (RDAS) by the CBN on Feb. 18.
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