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Banks’ Reserves with CBN Drop to N2.962tn


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Nigeria

IMAGE: CBN and logo »

Dec.03.2013

 

The total amount of deposit money banks’ (DMBs’) reserves with the Central Bank of Nigeria (CBN) reduced to N2.962 trillion as at October 2013.
The latest CBN money and credit statistics for October showed that the amount represented a reduction by N214 billion, compared to the N3.176 trillion, it was as at October.
The data also showed that credit to the private sector reduced slightly year-on-year to N16.276 trillion at the end of October, from N16.279 trillion the previous month.
Similarly, currency outside banks during the month under review was N1.249 trillion as against the N1.168 trillion it was the preceding month, while demand deposits also dropped slightly to N5.211 trillion from N5.125 trillion as at September.
Meanwhile, Emerging Markets Strategist at Standard Bank, Mr. Samir Gadio, has noted that despite ample liquidity pushing down secondary market treasury bill yields in recent months (364-day tenor currently around 12.7 per cent), there may be short dollar/naira carry trade given the favourable exchange rate outlook for the first half of 2014 as well as considering the degree of tradability of the debt and forex markets.
Gadio, who stated this in a report pointed out that the CBN’s reticence to conduct expensive Open Market Operations (OMO) had translated into large naira liquidity surplus.
“The CBN’s decision to reintroduce the Retail Dutch Auction System (RDAS) and suspend the WDAS, impose a cap on dollar sales by banks to the BDCs, as well as place further regulations surrounding forex cash importation by banks, contributed to the favorable naira performance in the official and interbank markets, albeit at the expense of a wider spread with the parallel market.
“We remain underweight Nigerian Eurobonds as the valuations look expensive and limit any meaningful yield compression in the short-to-medium term. This apparently tight monetary stance overlooks a relaxation in effective liquidity conditions in recent weeks, as evidenced by large naira surpluses in the system in October/November on the back of OMO redemptions and fiscal inflows, coupled with much less proactive sterilisation efforts,” he added.

Article Credit: ThisDay Newspaper

Updated 5 Years ago
 

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