The Nation Newspaper

Tag: rates

  • Interbank rates ease on N183b liquidity boost from T-bills

    Interbank rates ease on N183b liquidity boost from T-bills

    The interbank lending rates eased to 14 per cent last Friday from 40 per cent  after injections of liquidity from N183 billion matured Treasury bills and refunds by the Central Bank of Nigeria (CBN) cash set aside by banks to buy dollars.

    The cost of borrowing among banks jumped to 70 per cent during the week on tight liquidity after the Central Bank tightened liquidity to support the naira. The apex bank last week directed banks to pay for their dollar purchases 48 hours in advance, draining the market of liquidity.

    Reuters quoted traders saying about N183 billion ($920 million) in matured Treasury bills was injected into the money market by the apex bank causing rates to fall.

    Also, more funds from interest payment on bonds and refunds to banks from the CBN for their forex cash provision also raised liquidity, traders said. “Interbank lending rates swung as a result of tight liquidity arising from the provision for forex purchases and we expect the cycle to continue this week,” one dealer said.

    Traders said banks’ cash balances with the CBN stood at about 80 billion naira compared with a 25 billion naira cash surplus last week. The secured Open Buy Back (OBB) and overnight placement closed at 14 per cent from 40 per cent apiece for  OBB and overnight placement last week.

    “We expect  rates to trend up early this week on possible cash withdrawal by NNPC (state-owned energy firm) and could trade around the 30 per cent level until inflows of budgetary allocations to government agencies come in,” another trader said.

    Nigeria, Africa’s top crude exporter, distributes revenue from oil among its three tiers of government every month, injecting liquidity into the money markets.

    Meanwhile, the CBN Governor, Godwin Emefiele said he’s on a mission to transform the economy. That’s not what investors are seeking.

    While the collapse of oil revenue in Africa’s biggest crude producer has limited the bank’s ability to prop up the currency, Emefiele has resisted pressure to devalue the naira. Instead, he has imposed foreign-exchange restrictions on imports, risking growth in the continent’s largest economy as retailers and manufacturers struggle to source the funds needed to run their businesses.

    Emefiele has deflected criticism of his performance 14 months into the job by highlighting the CBN’s need for an expanded mandate on monetary policy. He wants the bank to play a more developmental role, including creating jobs and facilitating loans to “productive” industries. Investors say he’s neglecting his main job.

    “The tragedy is that over the past few years, the CBN built up credibility for reforming, for inflation targeting, establishing itself as one of the more orthodox central banks in Africa,” Holger Siebrecht, an associate portfolio manager at Acadian Asset Management LLC, said by phone from Boston. “Now it is at risk of gambling this reputation away.”

     

     

  • Oliseh rates Nigeria low

    Oliseh rates Nigeria low

    •Says Eagles now all-comers show
    •Laments empty stands during matches

    Sunday Oliseh has expressed displeasure with the prevailing culture in the current Super Eagles team and has branded the team as an all-comers’ affair.

    “The pressure is less now not as it used to be. It’s way easy to play for Nigeria now and is one of the reasons why we are not performing,” he explained to www.footballlive.ng.

    The former Eagles anchor man said the team play under unfettered conditions unlike the tense pressure that accompanied matches involving the team back when the Super Eagles’ matches were played in the National Stadium Lagos.

    “Imagine those days, playing in front of a hundred thousand people and after 20 minutes on the pitch without a goal the fans start sing ‘ all we are saying give us one goal’, that was pressure.

    “You had your family in Lagos with their future and yours in your hands, that was pressure, you play at the World Cup or Nations Cup and you can’t be second best, that is pressure. So, now it’s easier to play, God blessed us with a golden generation and we didn’t appreciate them enough,” he concluded.”

  • Inter-bank rates stable on budget, mature T-Bills

    Inter-bank rates stable on budget, mature T-Bills

    The interbank rates were steady at six per cent on average yesterday, unchanged from last week’s. This followed an increase in cash flow to the banking system from budgetary allocations and retired Treasury Bills.

    Traders said about N284 billion was injected into the system from budgetary allocations to government agencies, while an additional N227 billion was paid out in matured government debt, boosting liquidity and keeping interest rates at a lower level.

    “The system was very liquid and many banks had sufficient cash to support their transactions this week,” one dealer told Reuters.

    Traders said though the Central Bank of Nigeria (CBN) made frantic efforts to mop up excess funds from the interbank market by selling about N828 billion worth of Treasury bills, the market remained sufficiently liquid to keep the interbank rate low.

    “We expect the system liquidity to open on Monday at around N600 billion,” another dealer said. The secured Open Buy Back (OBB) closed at six per cent, same level last week, same for overnight placement, traders said.

    Dealers said rates should remain unchanged next week, unless the central bank takes action by mopping up excess liquidity.

  • Interbank rates rise on N72b cash withdrawal

    Interbank rates rise on N72b cash withdrawal

    Plans by the Central Bank of Nigeria (CBN) to withdraw about N72 billion from commercial lenders to enforce its cash reserves requirements (CRR) have induced an upsurge in inter bank rate.

    The measure is in line with the apex bank’s policy to maintain its current Cash Reserve Ratio (CRR). The CBN requires commercial lenders to set aside 75 per cent of public sector and 15 per cent of private sector deposits in cash in their respective accounts with the regulator. The CRR is a portion of banks’ deposit kept with the CBN as regulatory requirement.

    This has led to overnight lending rates rising sharply on Friday to 27 per cent from 10.25 per cent following a scramble for funds as lenders sought to meet a CBN’s CRR requirement, making demand for funds very high in anticipation of the CRR debit this week.

    A dealer said he expects the market to be tight next week, while rates should hover around 25 per cent until central bank repays some matured Treasury bills.

    Also, the apex bank at the weekend, raised N183.64 billion in Treasury bills with yields falling compared with the previous sale last month.

    The lender said Treasury bill yields fell in tandem with declining yields on fixed assets on renewed investor interest in the local debt market after a peaceful presidential election in Africa’s biggest economy and most populous country.

    It raised N20.15 billion in the three-month debt at 10.5 per cent at the auction held on Wednesday compared with 10.69 per cent at the March 25 auction.

    The bank also sold a total of N33.49 billion worth of the six-month paper at 14.1 percent, lower than 14.55 percent at the previous auction.

    The bank raised N130 billion of the one-year note at 14.15 per cent, down from 14.85 per cent at the last auction. Investors – mostly domestic banks and pension funds – submitted bids worth a total of N433.13 billion against N297.06 billion at last month’s auction.

  • CRR fallout: Banks raise interest rates by 2%

    CRR fallout: Banks raise interest rates by 2%

    Businesses and the real sector are in for hard times. This is because of the decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to raise the Cash Reserve Ratio (CRR) of public sector funds.

    Experts said this would lead to increase in rates charged by Money Deposit Banks (MDBs) for lending.

    Investigations revealed that last week, banks adjusted their interest rates upwards by about two per cent, implying that the cost of money to businesses and the real sector has moved up by the same margin.

    A source, who asked not to be named, said the bank intimated its customers of the increase. The official said the agreement banks had with their customers made allowance for such adjustments, “depending on the prevailing interest rates’’.

    He said though he could not speak for other financial institutions, he was “certain that all banks have adjusted their rates,” adding, however, that the margin might differ from one bank to another.

    On the likely consequence of the action on banks’ operations and profits, he said, bank’s profits would be affected, adding that he could say how the industry would respond to the workforce.

    “There’s no doubt that the sector’s turnover and profit will be affected in the third quarter, but as to how this will impact on the workforce, I can only hazard a guess,” he said.

    However, the chief executive officer (CEO) of one of the banks, who asked not to be identified, hinted that banks would prefer a raise of the interest rates rather than resort to sacking. The CEO said the new 50 per cent CRR for public sector funds has increased the cost of operations in the banks, adding that the issue would form part of their presentation to the apex bank at the next Bankers Committee meeting.

    “We will definitely complain to the CBN on the CRR when next we meet,” he added.

    At its last MPC meeting, the CBN introduced a variance to the CRR. While it retained the CRR for private sector funds at 12 per cent, it raised the one for public sector deposits to 50 per cent. Thus 50 per cent of public sector deposits, which form a large chunk of banks’ loans, are outside the reach of the banks.

    Until the adjustment, banks’ lending rates to businesses and the real sector hovers around 25 per cent. But with the new development, the fear that the lending rate may hit 30 per cent is in the air.

     

  • Group rates FRSC as outstanding public institution

    The Independent Service Delivery Monitoring Group (ISDMG) has rated the Federal Road Safety Commission (FRSC) among the most effective and efficient public institutions in Nigeria.

    The Executive Director of SDMG, Dr Chima Amadi, announced the rating in Abuja at the unveiling of the Service Delivery Report and Award.

    Amadi said in the course of discharging its function, FRSC had initiated some key policies, such as the Road Transport Safety Standardisation Scheme (RTSSS), which stipulates minimum safety equipment for fleet operators.

    He said the commission also recorded N558, 154,027 as revenues from National Vehicle Identification Scheme (NVIS) and fines from road traffic offenders in the last six months.

    Amadi said ISDMG followed international precedents and models for effective delivery assessment to arrive at its results.

    “ I must say the integrity of the assessment is not in any way compromised by virtue of the fact that the assessed picks the cost of such assessment.

    “We are confident that recognising achievement of agencies of government that deliver on their mandates will not in any way take the zeal and zing off our responsibility of constructively engaging them on issues of rendering efficient service delivery to the people.

    “The fact that the drivers of these MDAs are Nigerians not contracted foreign consultant proves that only Nigerians can bring about the much desired dividends of democracy, “ he said.

    Amadi highlighted some of the criteria used to arrive at the rating as transparency and fiscal discipline, prompt response to mails, contribution to the economy, web visibility and public perception.

    He said public institutions owed Nigerians service and account of service when demanded, stressing that service delivery entails respect for the rule of law.