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Tuesday, 17 September 2013
Monetary policy interventions hit N1.27tr
Forex demand reaches $4.2b
VARIOUS monetary policy interventions in the Nigerian economy by the Central Bank of Nigeria (CBN) for the month of July amounted to N1, 266.18 billion, the apex bank’s Economic Report has shown.
It also showed the liquidity level in the money market further increasing in the period under review. According to the report, the policy was implemented in the form of injections through the repayment of Open Market Operations (OMO) matured bills, Statutory Revenue Allocation and Value Added Tax to the federal, states and local governments.
Others were the Joint Venture cash call and Subsidy Re-investment and Empowerment programme, as well as contractual obligations and arrears of the February Statutory Revenue Allocation.
Meanwhile, aggregate demand for foreign exchange by authorised dealers under the Wholesale Dutch Auction System (wDAS), Bureau-de-Change (BDC) and wDAS-
Forwards contract was put at $4.20 billion in July 2013, showing an increase of 36.1 per cent and 62.6 per cent above the levels in the preceding month and corresponding month of 2012.
Relative to the preceding month’s level, however, the development was attributed to increased demand at WDAS and BDC segments by 25 per cent and 34.7 per cent respectively, arising from liquidity surfeit in the banking sector.
A total of $3.99 billion was actually sold by the CBN to authorised dealers during the period, reflecting a decrease of 22.1 per cent below the level in the preceding month, but an increase of 61.3 per cent above the level at the end of the corresponding period of 2012.
Consequently, money market rates trended downward, while the patronage at the CBN window for Standing Deposit Facility (SDF) increased substantially. The OMO auction on CBN bills of varying tenors failed to yield the desired result, as Money Market Dealers’ quoted rates were deemed speculative.
Also, restrictive monetary policy was sustained with the Monetary Policy Rates retained at 12 per cent, while the implementation of the 50 per cent CRR on public sector deposits with the deposit money banks kicked off.
Under the wDAS segment, the average exchange rate of the Naira against the United States (U.S.) dollar was N157.32, depreciating marginally by 0.1 per cent below the level in the preceding month.
Similarly, at the inter-bank and BDC segments, the average exchange rates depreciated by 0.7 and 0.9 per cent to N161.12 per dollar and N162.39 per dollar respectively, below their levels in the preceding month.
Consequently, the premium between the wDAS and BDCs widened from 2.3 per cent to 3.2 per cent in the month of July, while the premium between the inter-bank and wDAS segments also widened to 2.4 per cent in the reviewed month from 1.7 per cent in the preceding month.
The lingering disparity between banks’ deposit and lending rates during the reviewed month trended downward, with the exception of the average savings rate, which jumped to 2.45 per cent from 2.04 per cent in the preceding month.
The average prime and maximum lending rates fell by 0.03 and 1.53 percentage points to 16.53 and 23.05 per cent respectively in the reviewed month, while the spread between the weighted average term deposit and maximum lending rates narrowed by 1.34 percentage point to 16.89 per cent in July 2013.
Consequently, the margin between the average savings deposit and maximum lending rates narrowed by 1.94 percentage points to 20.60 per cent at the end of July 2013.
Also, provisional data on aggregate foreign exchange flows through the economy indicated that total inflow was $16.17 billion, representing an increase of 28.2 per cent and 6.21 per cent over the levels in the preceding month and the corresponding period of 2012 respectively.
The observed increase in inflow above the level in the preceding month was attributed to the 39.9 per cent, 2,129.6 per cent and 9.3 per cent rise in receipts from oil, non-oil and autonomous inflows respectively, with those from CBN and autonomous sources accounting for 35.7 per cent and 64.3 per cent of the total respectively.
At $4.3 billion, oil sector receipts rose by 43.3 per cent above the level in the preceding month and accounted for 26.5 per cent of the total inflow. Also, on a month-on-month basis, non-oil public sector inflow, which was put at $1.5 billion, rose by 2,129.5 per cent and accounted for 9.3 per cent of the total inflow, while autonomous inflow, put at $10.4 billion, rose by 9.3 per cent, accounting for 64.2 per cent of the total.
On the other hand, aggregate foreign exchange outflow from the economy, put at $4.94 billion, declined by 16.7 per cent below the level in the preceding month, but rose by 55.0 per cent above the level in the corresponding period of 2012.
Thus, foreign exchange flows through the economy resulted in a net inflow of $11.87 billion in the reviewed month, compared to $6.69 billion and $6.79 billion in the preceding month and the corresponding month of 2012 respectively.