The Central Bank of Nigeria (CBN) has said a total value of transactions at the inter-bank funds market stood at N25.4 trillion in the first six months of this year.
In the apex bank’s half-year activity report released at the weekend, it said the interbank deals represent a decrease of N667.81 billion and 2.63 per cent from N26.07 trillion in same period of 2021.
The report, signed by CBN Deputy Governor, Economic Policy, Kingsley Obiora, said analysis of the transactions showed that open-buy-back (OBB) stood at N25.2 trillion, accounting for 99.41 per cent, while the unsecured inter-bank call took up 0.59 per cent or N150.52 billion.
In the corresponding period of 2021, OBB accounted for N25.86 trillion or 99.18 per cent, while the unsecured segment recorded N214.40 billion or 0.82 per cent. The sustained recourse to the OBB segment in the review period was attributable to risk aversion by counter-parties, as there was low appetite for unsecured lending in the market.
Obiora said money market rates movements was influenced by liquidity conditions in the banking system.
He listed the contributory factors as the fiscal operations of government; effects of Cash Reserve Ratio operations; deposits and settlement for foreign exchange intervention, as well as the sale and maturities of CBN and government securities.
“Consequently, the weighted monthly average inter-bank call rates ranged between 4.50 per cent and 14.31 per cent, while the average OBB rate ranged between 6.10 per cent and 10.89 per cent in the review period. On a monthly basis, the highest weighted average rates at the call and OBB segments were 14.31 per cent and 10.89 per cent in January and June, respectively. Conversely, the lowest rates of 4.50 per cent and 6.10 per cent for the call and OBB segments were in January and February, respectively,” he said.
The highest rate at the inter-bank call and the OBB segments were attributed to the effects of debits for cash reserve requirement and foreign exchange transactions. On the other hand, the lowest rates at the two segments were influenced by liquidity injections and the interplay of interbank transactions.
“The movement of inter-bank interest rates also oscillated during the review period. The daily OBB rate ranged between 0.57 per cent and 15.29 per cent, compared to the range between 0.36 per cent and 32.91 per cent in the first half of 2021.
The daily inter-bank call rate ranged between 4.50 and 16.00 per cent in the first half of 2022 as against the range between 2.00 and 30.00 per cent in the corresponding period of 2021,” he stated.