By Babajide Komolafe
The declining fortunes Â Â Â of the naira was halted yesterday as it recorded its first appreciation in two months-gaining 10 kobo against the dollar.
Meanwhile, cost of funds rose further yesterday in the interbank money market, indicating declining level of funds.
At the end of the WDAS session conducted by the Central Bank of Nigeria (CBN) yesterday, the naira appreciated by 10 kobo against the dollars. At the end of session, N152.01 exchange for one dollar as against N159.01 last week.
The last time the naira appreciated was July 15th when it gained 20 kobo against the dollar. Since then till last week the naira had depreciated by 581 kobo.
Meanwhile, cost of funds continued to rise at the interbank money market. At theÂ Â close of business yesterday interest rate on Overnight lending stood at 13.5 per cent, up from 13 per cent on Friday.
Interest rate on Collateralised lending or Open Buy Back (OBB) however remained stable at 8.00 per cent.Â Money market operators attributed the increase in overnight lending rate to declining level of funds available in the market.
Vanguard investigation revealed that the market experienced large outflow of funds last week which pushed up cost of funds by more than 50 per cent.
During the week, the market experienced outflow of N103.26bn through withdrawal by Nigeria National Petroleum Cor-poration (NNPC) and by banksÂ Â for funding of foreign exchange purchases at WDAS.
While NNPC withdrew N23.4bn, foreign exchange purchases sapped the market of N79.864bn.
Consequently, interest rate on cost of overnight lending rose to 13 per cent from 5.75 per cent while that of OBB lending rose to 8.0 per cent from 4.75 per cent. Market operators said that cost of funds would continue to rise this month until the monthly statutory allocation fund is released.