…cushions forex backlog with $697 million in 1-month forward
By Odunewu Segun
The volume of loan from the Central Bank of Nigeria (CBN), to commercial banks in the country, jumped sharply last week by 173 per cent to N281 billion.
Lending to banks through the CBN’s standing Lending Facility, SLF, surged from N102.89 billion the previous week to N281 billion at the close of business on Friday, June 17.This increase represents the second consecutive week of rise in CBN’s lending to banks just as lending in the previous week, leaped by 97.9 per cent.
However, the amount of cash deposited with CBN by banks with surplus cash slumped 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.
Meanwhile, the apex bank has sold $3.5 billion on the forward market after it auctioned $532 million and intervened on the interbank market on Monday to clear backlog of currency demand as it lifted its peg on the currency.
The bank sold $697 million in one-month forward, $1.22 billion in two-month contract and $1.57 billion due in three months, in order to clear a backlog of $4.02 billion of demand, market operator FMDQ Securities Exchange said.
The naira opened 1.4 percent weaker at 286 to the dollar on Tuesday, with $2 million traded. It had tumbled 30 percent to 282 naira on Monday.