The interbank lending rates of Nigeria, Africa’s second largest economy, has recorded a 15 percent average increase this week, a marginal increase from the 14.33 percent it had in the previous week. This according to experts is an aftermath of large cash withdrawals by the Nigerian National Petroleum Corporation (NNPC), causing drained liquidity of bond flows and forex purchases.

The state oil firm’s recall of more than 200 billion naira ($1.2 billion) from some lenders of the corporation’s account with the apex bank caused market liquidity to close on a negative note; it also lowered liquidity to a negative opening balance of about 12 billion naira ($74 million) on Friday.

In addition, the West African nation last week realized about 75 billion naira ($463 million) from the sale of bonds with 5-year to 10-year maturities, and about $500 million was also raised at the bi-weekly forex auction, which soaked naira liquidity from the financial system, bringing about a surge in bank borrowing costs.

Secured Open Buy Back (OBB) rate jumped to 14.75 percent, from last week’s 13.50 percent, and 475 basis points above the Standing Deposit Facility (SDF) rate; it’s also 2.75 percent above the apex bank’s 12 percent benchmark rate.

“We are expecting the release of budget allocations to government agencies by next week, which should raise the liquidity level in the system and help lower cost of borrowing in the Interbank,” said a dealer on Friday.