I&E Window transacts $900m, as reserves stagnate at $47.6 billion
There was near excess in the quantity of money in circulation last week, save for the increased mop up exercise by the Central Bank of Nigeria (CBN), following the repayments of N66.7 billion and N377.6 billion worth of Treasury Bills (T-Bills) and Open Market Operations.
The movement in system liquidity during the week had risen in two of the four trading days, resulting to 3.7 per cent rise in the quantity of money in circulation to N842 billion compared to N812.1 billion in the preceding week.Consequently, the two most popular traded instruments among banks- Open Buy Back and the Overnight rates, trended southwards by 0.7 percentage points (ppts) and 0.5ppts to 2.8 per cent and 3.6 per cent respectively.
During the rollover of the instruments, investors showed apathy for short tenored bills, as they asked for higher rates, causing an under-allotment to reduce cost for government, which subsequently left a sizable quantity of money in circulation till the weekend.Analysts at Afrinvest Securities Limited said this week, despite the absence of maturing bills, except N183.3 billion worth of OMO maturities, the apex bank will sustain its trend of liquidity mop ups and money market rates could trend higher.
Similarly, at the foreign exchange market, the naira remained stable, defying the influence of speculations ahead of the biannual meeting of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, at the weekend, which increased oil production by one million barrels per day.
The decision, which is expected to influence global oil price, would further affect Nigeria’s external reserves that have remained stagnant in weeks at $47.6 billion, as crude oil accounts for a large proportion of the nation’s foreign exchange earnings.
Specifically, the reserves have stagnated in the last three weeks, with an earlier back and forth movement, as reports showed that Nigerian crude oil cargoes from the June programme took long before they were cleared, as demand was not strong enough and differentials were too high to spark much buying of July barrels.During the week, the Central Bank of Nigeria (CBN) continued its weekly intervention, offering $210 million through the Wholesale SMIS window to maintain stability, as well as sustain liquidity in the foreign exchange market.
Consequently, the CBN spot rate appreciated five kobo when measured week-on-week to N305.80 per dollar from N305.85 per dollar in the previous week, while at the parallel market, the naira traded flat for the second consecutive week at N362 per dollar.
In the same vein, the local unit, at the Investors and Exporters’ (I&E) forex Window, appreciated seven kobo week-on-week to N361/$ from N361.07/$ in the previous week.On the activity level, transactions improved by 15.1 per cent at the autonomous window, as investors exchanged about $900 million against $800 million recorded the previous week.
Source: G Business