According to reports, the interbank lending rates which is the rate at which banks lend amongst themselves soared to an all time high of 128 per cent from 70 per cent last week Friday after banks funded their accounts to participate in a currency forward, even as the value of the naira gained strength at the parallel market.
The naira which sold around N460 to the dollar at the weekend closed yesterday stronger at N455, although bureau de change operators said the value had reached around N440 during the day.
The naira also closed stronger at the interbank market on the back of interventions by the Central Bank of Nigeria(CBN) and a cash crunch which hit the financial system. Overnight interbank rate soared to a record high of 128 per cent yesterday on naira cash shortages having opened the day at 100 per cent, traders said.
The money market had ended on Friday with no deals as commercial lenders held onto naira to be able to participate in the auction and overnight rate had closed Friday around 70 per cent from 14 per cent which it was on Thursday.
At the interbank market, the naira sold at N305.5 to the dollar, the highest in the last two months. Traders said the apex bank, which has been selling dollars regularly to prop up the currency, sold around $1.5 million towards the close of trade yesterday after the market was open for nearly four hours with no deals.
Traders said the CBN held a dollar forward auction last week Friday to clear a backlog of demand from airlines, manufacturers and other companies, as the country’s currency crisis deepened. Result of the auction was yet to be published.