LAGOS: Nigeria's overnight lending rate stood at 1 percent on Friday, a level it traded at on the money market last week, as excess liquidity persisted following an interest rate cut this week and a treasury bill repayment, traders said.
The central bank cut benchmark interest rate to 11 percent from 13 percent on Tuesday, its first reduction in more than six years.
The continent's top oil producer has been hit by a plunge in crude prices over the last year. The bank has been injecting cash into the banking system since October in a bid to help the economy.
Banking system credit stood at 571 billion naira as of Friday, keeping overnight rates low.
Traders also said the central bank repaid 162 billion naira in maturing treasury bills on Thursday to boost liquidity.
"We don't expect much change in market liquidity next week hence borrowing costs will continue to trade at the same level," one trader said.
The secured open buy-back (OBB) - the rate at which lenders can borrow from the interbank market using treasury bills as collateral - closed at 0.5 percent, far below the central bank's benchmark rate.
The bank also lowered cash reserve ratio for commercial banks to 20 percent from 25 percent this week, another move to try to inject liquidity and encourage lending.
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