CBN loans to banks drop by 13% …Naira circulation hits N1.66 trn


Stories by Kayode Tokede and Ehime Alex

The Central Bank of Nigeria (CBN) loans to banks dropped sharply last week by 13 per cent to N207 billion.

Nigerian NewsDirect reveals that lending to banks through the CBN’s Standing Lending Facility (SLF) dropped from N239 billion the previous week to N207 billion at the close of business on last week Friday.

  This implies that few banks last week depend on CBN loans to meet their cash obligations.

However, the amount of Naira in circulation hit N1.66 trillion in July, 2016, 1.2 per cent below N1.68 trillion recorded in June 2016.

According to data collected from CBN, the currency in circulation early this year was N1.73 trillion but dropped by 0.78 per cent to N1.7 trillion in February.

Currency in circulation according to CBN data stood at N1.8 trillion in March, the highest so far in 2016.

The CBN had continued to mop-up liquidity in the system, a move to curb rise in inflation and fund government revenue shortfalls.

In funding 2016 budgets, the Federal Government had announced plans to raise N1.22 trillion from Treasury bills (T-bills) in the first quarter of 2016.

The CBN in a statement had explained that it would auction N245.77 billion worth of 91-day bills and N238.51 billion worth of 182-day paper between December 17, 2015 and March 3, 2016.

It will raise N735.54 billion worth of 364-day T-bills in the same first quarter of 2016.

  Furthermore, the naira heaved a sigh of relief in the parallel markets last week, where it appreciated to N390 per dollar from N400 it was traded in the opening week.

The naira however remained stable at the interbank market where it traded at the official exchange rate of N350.91 per dollar. The naira is however expected to depreciate in the parallel market from this week when maintained supply of $30,000 per week to Bureaux De Change operators.

A statement by Acting Director, Trade and Exchange Department of CBN, W.D Gotring, directed authorised dealers not to sell foreign exchange to any BDC more than a maximum of 30, 000 dollars per week.

According to the statement, a BDC shall nominate its preferred dealer or a bank to procure the said amount from only that bank in a week.

It also said that the selling rate by the dealer to BDCs should be the buying rate from International Money Transfer Operators plus a margin not exceeding 1.5 per cent.

It said, “Foreign exchange cash purchased by BDCs shall be sold to foreign exchange end-users at a rate not exceeding two per cent margin above the buying rate.

“The two per cent margin above shall be applicable to all funds to be retailed by the BDCs regardless of sources of funds.”

The statement mandated BDCs to render weekly report of purchases from authorised to its trade and exchange department.

It said that funds purchased by BDCs should be eligible for Business Travel Allowance, Personal Travel Allowance, Oversees School Fees and Oversees Medical Fees.

The statement warned that any BDC which violated the above directives would be punished accordingly.