Stories by Kayode Tokede
The Central Bank of Nigeria (CBN) bor-rowed commercial banks operating in the country N174.6 billion in one week, a decline of 22.6 per cent from N225.5 billion borrowed in prior week ended June 15, 2018.
Commercial banks in the country through the Standing Lending Facility (SLF) borrowed from the CBN to cover their financial shortfalls and trading obligations on short term basis as applicable interest remained at 16 per cent.
The highest and lowest amounts the banks borrowed from the CBN last week was N54.56 billion and N34.24 billion, respectively in four days.
Between June 19 and June 22, 2018 commercial banks have borrowed N34.25 billion, N54.56 billion, N45.78billion and N39.99billion respectively from the CBN.
The Managing Director, Mr. David Adnori in a chat with Nigerian NewsDirect, explained that banks borrowing from the apex bank as the last resort dropped due to excess liquidity.
He noted that the capital market is benefiting significantly.
According, him, “There is excess liquidity in the nation’s economy and it usually reflects on what banks have in their treasury. Since the banks are awash with a lot of liquidity, there is no need for them to borrow again from the CBN as a last resort.
“There are many reasons we have access liquidity in the economy. The federal government income from the oil revenue has increased and CBN is monetizing the Dollar income into Naira for federal government spending.
However, the naira remained flat against the dollar at N362 in the parallel market for the third consecutive week, while it strengthened by 0.02per cent to N361 in the Investors Exporters Foreign Exchange window. (IEFX)
Total turnover in the IEFX rose to $906.02 million, from $619.06 million last week, with bulk of transactions (99.74per cent, previously 90.38per cent) traded within the N360-N369/USD band.
The overnight lending rate shed 67 basis points on average, to close at 3.58per cent.
Despite the CBN’s Open Market Operation (OMO) intervention on Tuesday, where it mopped up N137.40 billion from the system, liquidity remained relatively healthy and was further boosted by Thursday’s inflows from OMO bills (N377.62 billion) and primary market repayments (N66.68 billion).
Despite healthy liquidity, activities in the treasury bills market were bearish as general emerging market weakness filtered into the domestic space, leading to selloffs by foreign investors.
Consequently, average yield rose by 31 basis points to 12.89per cent.
Investor sentiment was negative across the short (+56 basis points) and mid (+35 basis points) ends of the curve, amid selloffs of the 83DTM (+173 basis points) and 174DTM (+112 basis points) bills, respectively. However, yield at the long (-7 basis points) segment contracted, amid increased demand for the 286DTM (-33 basis points).
Meanwhile, at last week’s primary market auction, N5.40 billion, N20.00 billion, and N14.62 billion of the 91-day, 182-day, and 364-day bills were allotted.
The bills were 1.58x oversubscribed, with yields closing lower across the 91-day (10 per cent; previously 10.2per cent) and 182-day (10.30per cent; previously 10.50per cent) bills. Yield on the 364-day bill closed at 11.50per cent once again.