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Wednesday, 25 September 2013
Interbank naira market responds to liquidity dynamics –FMDA
Last month, activities at the interbank naira market responded to liquidity dynamics in its characteristic manner as the Central Bank of Nigeria (CBN) monetary policy stance remains unchanged.
According to Financial Market Dealers Association (FMDA) in their nancial and economic report for last, as a result, “rates fell below the Monetary Policy Rate (MPR) of 12 percent for active tenors at month-end on relative ease in liquidity levels compared to the month-opening positions which stabilises rate above the benchmark.”
FMDA said liquidity squeeze through N250.24billion Open Market Operation (OMO) bills and N157.06billion Primary Market Auctions (PMA) sales with N93.45billion Wholesale Dutch Auction System (WDAS) debit ensured rates closed the rst week at (12.83percent, 13 percent and 13.21percent) for call, 7 days and 30 days respectively despite net inows of N501.37billion from treasury bills and Joint Venture Cash Call of N45billion. e nancial market dealers said rates jumped dramatically by the second week to (15.37percent, 15.45 percent and 15.83percent) for call, 7 days and 30 days respectively as net opening cash balance nosedived to N12.21billion.
“e system illiquidity was precipitated by outows via N78.11billion FX purchases at WDAS window, N180billion NNPC withdrawal and net outows of N15.67billion from OMO bills despite N84.22billion inow from Excess Crude Account release. However, it moderated southward to (10.54percent, 11.20 percent and 11.63percent) for Call, 7 days and 30 days respectively in the third week following improvement in liquidity levels as inows from N272.53billion FAAC fund disbursement douse the eects of outows via N110billion bond auction, N102.18billion net outow from treasury bills and N84.95billion WDAS debit,” they stated.
NIBOR closed last month slightly lower in the fourth week at (10.58percent, 10.87percent, and 11.13percent) for Call, 7 days and 30 days respectively, as liquidity inows from N198.40billion matured OMO bills minimized the eects of outows via N252.50billion OMO bills sales and WDAS debits of N57.90billion.
“On monthly average, rates increased by (1.02percent, 1 percent and 0.97percent) for Call, 7 days and 30 days respectively in the month under review compared with the average rates of the previous month. e Open Buy Back (OBB) opened 354-350basis points below standing lending facility for Banks and discount houses respectively. However, the gap thinned out at the middle of the month to reach a nine-month high of 15.04 percent and 15.08 percent for both institutions before depressing by 209-217 basis points toward the end of the month in sharp response to liquidity dynamics. Month-on month average, the OBB closed at 10.33 percent for the deposit money banks and 10.50 percent for the Discount Houses, reecting 33 basis points and 25 basis points decrease for both institutions when compared with the preceding month,” FMDA noted.