Business News

Market intervention rises, savings, deposit rates’ gap widens further


• Foreign exchange inflow falls
Lamido-Sanusi
THERE were indications that the Central Bank of Nigeria (CBN) and the Debt Management Office (DMO) made several interjections in the economy, using the Open Market Operations (OMO) in the month of April, resulting to relative stability of the system.
  The interventions were in the form of the sale of the Federal Government of Nigeria Bonds and Nigerian Treasury Bills (NTBs), which were issued at the primary market on behalf of the DMO for fiscal operations.
  According to CBN’s Economic Report for the month of April, the auction of NTBs of various maturities was used to mop-up excess liquidity from the banking system in line with the tight monetary policy stance of the apex bank. 
  Total amount of NTBs offered, subscribed to and allotted was put at N2,200 billion, N2,321.32 billion and N1,516.69 billion, respectively, compared with N2,910 billion, N2,061.29 billion and N1,265.24 billion, in the preceding month. 
  The bid rates ranged between 11.98 per cent to 13 per cent, while the stop rates ranged between11 per cent to 12.75 per cent, compared with the respective ranges of 9.98 per cent to 13 per cent and stop rates range of between 9.98 per cent to 12.75 per cent in the preceding month.
  Also, government bonds of seven, 10 and 20-year tranches, estimated at N342.94 billion were reopened and offered to the market in the month of April 2013, with N104.80 billion, N133.34 billion and N104.80 billion, offered, subscribed to and allotted respectively.
 However, relative to the level in the preceding month, the amount offered, subscribed to and allotted was N70.00 billion, N132.18 billion and N70.00 billion, respectively, at marginal rates of 10.70 per cent and 11.08 per cent, respectively, for five and 10year tranches. 
  Meanwhile, available data from the report indicated mixed developments in banks’ deposit and lending rates during the month under review. 
  According to it, with the exception of interbank call, the average savings and the 12-month tenored deposit rates, which rose by 0.85, 0.05 and 0.40 percentage points to 11.24 per cent, 1.82 per cent and 6.49 per cent, respectively, all other deposit rates of various maturities fell from a range of 0.85 and 7.99 per cent to a range of 0.84 and 7.94 per cent. 
  Also, while maximum lending rates rose by 0.49 and 2.22 percentage points to 16.65 per cent and 24.53 per cent, respectively, in the review month, the spread between the weighted average term deposit and maximum lending rates widened by 2.38 percentage points to 17.70 per cent in April 2013. 
  Similarly, the margin between the average savings deposit and maximum lending rates widened by 2.17 percentage points to 22.71 per cent at the end of April 2013.
  The report further showed that foreign exchange inflow through the CBN fell by 1.9 per cent, while outflow rose by 24.3 per cent, relative to their levels in the preceding month, with total non-oil export receipts by banks decreasing by 54.4 per cent below the level in the preceding month. 
  Specifically, foreign exchange inflow and outflow through the CBN in the month of April was put at $3.24 billion and $3.32 billion, respectively, with a net outflow of $0.08 billion, in contrast to a net inflow of $0.63 billion and $1.49 billion recorded in the preceding month and the corresponding period of 2012, respectively. 
 The decrease in inflow during the review period was attributed largely to the 70 per cent fall in the other official receipts, while foreign exchange outflow rose by 24.2 per cent and 89.2 per cent above the levels in the preceding month and the corresponding period of 2012, respectively. 
  But the development relative to the preceding month was attributed, largely to the “increase in National Priority Project, other official payment and wDAS utilization. Other official payments put at $0.42 billion, rose by 30.7 per cent above the level in the preceding month, driven largely by the increase in NNPC/JV cash calls and International Organizations and Embassies payments.[The Guardian]

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