CBN loans to banks jump by 173% to N281bn
The Central Bank of Nigeria (CBN) loan to banks rose sharply
last week by 173 per cent to N281 billion. Vanguard investigations reveal that
lending to banks through the CBN’s standing Lending Facility (SLF) rose from
N102.89 billion the previous week to N281 billion at the close of business on
Friday. CBN Governor, Mr Godwin EmefieleCBN Governor, Mr Godwin Emefiele This
represents the second consecutive week of sharp increase in CBN’s lending to
banks. The previous week, CBN lending to banks rose by 97.9 per cent. This
implies that some banks are relying more on CBN loans to meet their cash
obligations. It also implies banks with surplus cash are unwilling to lend to
banks with deficit. However, the amount of cash deposited with CBN by banks
with surplus cash dropped slightly by 3.47 per cent to N594.7 billion from N613
billion the previous week. Meanwhile, cost of funds dropped slightly in the
interbank money market following outflow of N314 billion worth of fresh
treasury bills sold by the CBN as well as inflow of same amount from repayment
of matured treasury bills by the apex bank. As a result, the Nigeria Interbank
Offered Rate (NIBOR) for overnight lending fell to 2.15 per cent from 4.33 per
cent, while the rate for One month lending fell to 8.06 per cent from 9.04 per
cent. However, interest rate for Three months and Six months lending rose to
12.34 per cent and 11.87 per cent from 11.87 per cent and 13.89 per cent.
Analysts at Cowry Asset Management Limited, a Lagos-based investment firm
predicted that cost of funds will further moderate downward this week due to
inflow of N107 billion from payment of matured treasury bills and inflow from
statutory allocation. Meanwhile, the nation’s external reserve rose marginally
last week to $26.44 billion as at Thursday from $26.42 billion the previous
week. Consequently, the external reserve has risen by $50 million this month,
while it has fallen by $2.66 billion in 2016. The naira breathed a sigh of
relief in the Bureaux De Change and parallel markets last week, where it
appreciated by 2.47 per cent and 1.08 per cent to N355 per dollar and N365 per
dollar respectively. The naira, however, remained stable at the interbank
market where it traded at the official exchange rate of N197 per dollar. The
naira is expected to depreciate in the interbank market from today when the
flexible exchange rate regime will commence. Analysts at Cowry Assets
Management Limited however advised that the naira should be allowed to
depreciate to a rate close to that of the parallel market. “We advise a bullish
rate N350 per dollar which would allow the naira enough headroom to appreciate
instead of depreciate. An appreciation from the commencement interbank rate
would help the market regain confidence faster than a more conservative opening
rate that is below the equilibrium rate and subject to further depreciation,”
they said.
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