Banks borrowing from CBN jumps amidst liquidity plunges

Banks borrowing from the Central Bank of Nigeria jumped from N19.2 billion penultimate week to N489 billion as volume of idle cash (liquidity) in the interbank money market  plunged by 2,183 per cent last week.

Analysis of data sourced from the CBN shows that interbank money market liquidity opening level crashed to N12 billion on Monday from N349.6 billion the previous week.

On the contrary, banks’ deposits with the apex bank fell sharply by 67 per cent to N25.4 billion last week from N73.6 billion the previous week.

Further analysis showed that 86 per cent or N420 billion of banks’ borrowing from the apex bank were repurchase agreement (repo) while the remaining 14 per cent or N69 billion was through the Standing Lending Facility (SLF) of the apex bank.

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Also reflecting the severity of the scarcity of funds, cost of funds remained elevated throughout the week, with the interest rate on Overnight lending rising by 3.6 percentage points   to 17.25 percent from 13.7 percent on Monday.

Confirming this development, analysts at Zedcrest Securities on Friday, said: “Money market rates remained at double-digit levels closing the week by  2 basis points higher  on average from yesterday’s closing. System liquidity remained low at N11.98 billion  as some participants stayed camped at the CBN Repo window while others continued to source for deposits from large businesses.

“Subsequently, Open Buy Back (OBB) and Overnight (OVN) rates closed the week at 16.75 per cent and 17.25 per cent respectively.”

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Meanwhile, following the news of plans to trade dollars online, the Naira gained its highest against the dollar in the official market in almost a month.

According to data from FMDQ Securities, the Naira is starting the week at N410.80, up 0.17 percent from Monday’s opening rate of N411.50k/$.

This implies that for the first time since July 16, Naira is starting the week trading around N410.

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However, on the black market Naira is starting the week with N5 drop in value.

According to abokiFX, street currency traders sold the dollars at N515.00 per $1 on Friday, compared to N510 it was sold on Friday, 6 August.

This implies that anyone in need of dollars from the black market will buy on Monday morning at N515, the rate it has been trading at since last Wednesday.