The interbank lending rates are likely to go up this week as a result of paucity of funds in the market. Dealers in the market are of the opinion that until budgetary allocation, the rates would continue to climb high.

“We see rates inching up early next week as the dearth of funds persist until the next budgetary allocation to government agencies hits the system, hopefully later next week,” a dealer said.

The lending rates climbed higher to an average of 15.66 per cent last week, from 14.5 per cent the previous week, after NNPC recalled a portion of its deposits with some banks and forex purchases drained liquidity.

Traders said the market opened with a cash deficit of about N78.7 billion the previous Friday, compared with a surplus of about N10 billion last week.

“The market is very short this week because of large cash outflows to foreign exchange purchases, NNPC withdrawals and debit for cash reserves,” another dealer said.

The secured Open Buy Back (OBB) climbed to 15 per cent, from 14.25 per cent last week, 300 basis points above the central bank’s 12 per cent benchmark rate, and 5 percentage points above the Standing Deposit Facility (SDF) rate. Overnight placement and call money closed at 16 per cent each, compared with 14.5 per cent and 14.75 per cent, last week respectively.