By Odunewu Segun
Commercial banks in the country are likely to face a cash crunch in meeting their cash obligations to customers following the illiquidity in the banking system, National Daily has gathered.
According to findings, Lending to banks through the CBN’s Standing Lending Facility (SLF) dropped from N1.9 trillion fortnight ago to N1.8 trillion at the close of business on Friday.
Also, the money market rate has crashed in the past two consecutive weeks, coming from as high as 66.83 per cent to 4.75 per cent on the heels of CBN weekly intervention.
Compared to last week, the overnight rate declined by 24.92 per cent week-on-week, broadly validated by an improvement in system liquidity, which moved from a deficit of N207.19 million, to a positive balance of N153.62 million.
Experts at Cordros capital, a Lagos based research firm, attributed last week’s movement in the overnight rate to a deluge of inflows, in particular to a bond maturity totaling N480.13 billion and cash injections from monthly budgetary allocation worth N407.81 billion.
“The overnight rate was less sensitive to the debits for foreign exchange sales totaling $803.43 million and a net Open Market Operation (OMO) outflow of N178.96 billion”, they explained.
On foreign exchange, they noted that CBN sold approximately $803.43 million at the interbank window, through spot $3.14 million delivery and $429.09 million forward contracts, $246.20 million Small Medium Enterprises and Invisibles channel, $100 million authorized dealers, and the $25 million Investors & exporter’s market.
On this week’s outlook, they said, “While we look for continued stability of the NGN at the interbank market, we expect further interventions to temper the naira weakness parallel segment next week.
Meanwhile, at next week’s NTB auction, the apex bank will offer N150.61 billion across the 91-day (N45.18 billion), 182-day (N23.43 billion), and 364-day (N82.00 billion) bills.
“We look to a northward movement in rates in the coming week, owing to one, debit for foreign exchange sales and two, further OMO auctions to mop up both existing liquidity and the maturing N62.98 billion worth of OMO bills”.