The Nigerian overnight lending rates were quoted around 120 per cent yesterday after a court ordered a freeze on millions of bank accounts with incomplete identity documents and the Central Bank of Nigeria (CBN) sold treasury securities to tighten liquidity, traders said.
The CBN has kept rates high 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 rates had closed as high as 148 per cent on Monday as news of the court order filtered into the market. It later fell on Tuesday but remained above 100 percent. “There’s no liquidity in the market. The aim is to keep the money supply low as a way of controlling inflation and supporting the currency,” source.
Inflation slowed for the eighth month in September but was still high at 15.98 percent. The central bank has left benchmark interest rates at 14 percent for more than a year to keep debt market yields in positive territory to lure investors.
The debt office plans to auction 100 billion naira in bond on Wednesday. The central bank sold 18 billion naira in open market bills on Tuesday and another 11.3 billion the previous day.
Traders said the liquidity deficit in the banking system was widening, after hitting 300 billion naira on Tuesday.
On Monday, the central bank said it had sold $195 million to lenders as part of its regular dollar sales to boost forex liquidity and keep the currency stable, but the move was contributing to a naira shortage, traders said.
Meanwhile, the Senior Special Assistant to the President on Foreign Affairs and Diaspora, Hon. Abike Dabiri-Erewa, has appealed to both the CBN and Attorney-General of the Federation (AGF) to put modalities and logistics in place for Nigerians in the Diaspora to obtain their own BVN to avoid forfeiture of their savings in their respective bank accounts.
In a statement in Abuja by Abdur-Rahman Balogun, Special Assistant Media to Hon. Abike Dabiri-Erewa, implored CBN to make it possible to all Nigerians in the Diaspora to have their BVN done in their countries of abode as there has been challenges in getting it before now.
The Nigerians in the Diaspora has been remitting billions of US Dollars back to the country on yearly basis, the highest on the continent of Africa, thus contributing to the socio-economic development of the country..
“I hereby appeal to the CBN to look into the challenges the Nigerians living abroad face in getting their BVN done and extend the deadline for them to get the BVN done’’, Dabiri-Erewa pleaded.
The Presidential Aide also pleaded with the commercial banks to make the procedure easier for their customers, especially those living outside the country, to be able to meet up with the new deadline.