NewsExpress advert FCMB banner
CBN withdrawal of N1trillion good for naira stability, says expert

By News Express on 09/08/2013

Share on facebook Yahoo mail icon Gmail icon Share on Google+

Views: 2,684

Economic expert and analyst with Standard Chartered Bank, London, Razia Khan, has described the removal of N1 trillion by the nation’s apex regulatory body, the Central Bank of Nigeria (CBN) as a welcome development, saying that the process would lead to delivery of higher deposit rates and naira stability.

CBN had on Wednesday removed an estimated N1 trillion, about $6.27 billion from the banking system, causing interbank lending rates to spike by 7 percentage points from Tuesday’s close, but failing to lift the naira.

“A shock of this nature was what was required in order to start the process that will deliver higher deposit rates and naira stability. It’s only the first day of implementation, so in time things should settle,” Khan said.

“We expect the naira to trade more strongly after the holidays, falling back within the band. The market will grapple with how to cope with the additional tightness in liquidity. However, given that the level of dependence on public sector deposits varies widely, we do not expect sustained pressure on loan rates,” she added.

The internationally reputed analyst said she expects interbank rates to settle, but perhaps closer to the top end of the band around the MPR, rather than the lower band. Interbank lending rates rose to around 19 percent on Wednesday, up from around 12 per cent at Tuesday’s close, after the central bank debited lenders accounts to meet a hike in the cash reserve ratio (CRR) on public sector deposits to 50 per cent, from 12 per cent previously.

CBN said it would impose the requirement two weeks ago to tighten liquidity and support the naira.

But the naira fell slightly against the dollar, closing at 160.10 to the dollar on the interbank market, weaker than the 159.65 to the dollar it closed at on the previous day.

Reuters had quoted dealers saying this was because banks had already sold their dollar positions to meet the new requirement ahead of Wednesday, so the impact had already been priced in.

“The central bank finally debited our accounts today, draining the market liquidity and the overnight rate went up to 19 percent,” one dealer said.

Traders said many lenders had already sold down liquid assets and dollars to replenish their cash balances in preparation for the withdrawal.

“The market had priced the effect of the huge cash withdrawal since the announcement two weeks ago, while fresh dollar demand and lack of dollar flows are expected to push down the value of the naira next week,” another dealer said.

Analysts say Nigeria will need to attract back foreign inflows for the central bank’s move to have a sustained positive effect on the naira.

•Credits: Daily Trust (text), Razia Khan (photo, from her Twitter handle).

Source News Express

Posted 09/08/2013 6:13 PM


Share on facebook Yahoo mail icon Gmail icon Share on Google+



REVEALED: 3 natural ways to get stronger erections, last 25minutes on bed, and increase manhood size without using drugs. Also, Natural Prostrate Enlargement Remedy.. Get In HERE...


You may also like...
Talks to end US government shutdown end in...

Hope rises for food sufficiency as FEC approves...


Another American doctor diagnosed with Ebola

575 candidates vie for 309 elective positions in...

JAMB admits 2,674,485 students in 6 years

Leadership crisis, fraud in high places rock Nigeria...

33 hoodlums, cattle rustlers lynched

Constitution Amendment: Return original Bill, Senate writes Jonathan...

30 civil society groups challenge Senate, Jonathan on...

Why we won’t send husband killer to prison:...

Tinubu declares opposition dead in Oyo State


Latest News Powerful individuals behind herders/farmers clashes — Buhari Customs promotes 775 officers FG behind abduction of Dapchi girls — Ohanaeze 16 Enugu-bound passengers burnt to ashes as NSCDC operatives chase bus into valley Lagos Assembly summons 3 commissioners, others over heaps of refuse Kogi Governor increases students’ bursary allowance by 300 per cent Imo 2019: Largest grassroots group adopts Madumere •Says his antecedent speaks volumes Bill and Melinda Gates Foundation’s investment in Nigeria hits $1bn Patriots’ forum decries campaign of calumny against ex-NIA DG Dauda Abia Govt. launches ‘Creative Hub’ to boost tourism, arts, culture NiMet predicts partly cloudy, sunny weather for Friday Angry youths on rampage in Kaduna; burn church, police outpost


Most Read Nigerian female sex addict opens up, says ‘I like it with both men and women’ (332,811 views) NUDE PHOTO OF OMOTOLA JALADE-EKEINDE surfaces online (325,627 views) Shameless Genevieve Nnaji exposes breasts in public (261,209 views) Finally named: The full list of friends of Nigerian female sex addict who prowled Facebook (214,684 views) Igbo scholar disgraces Femi Fani-Kayode •Demolishes claims on Igbo/Yoruba history with facts and figures (198,230 views) OLUMBA OLUMBA OBU (the one who called himself God) IS DEAD (192,759 views) Breaking News: POPULAR REVEREND CONVERTS TO ISLAM in Kaduna (Nigeria) (167,993 views) OBJ’s son reported dead in Lagos plane crash •Names of more victims emerge (150,665 views) THE FINAL DISGRACE: Igbo scholar unleashes more facts about Igbo/Yoruba history, finishes off Femi Fani-Kayode with second article (143,360 views) My wasted years in Olumba Olumba Obu’s Evil Brotherhood (133,545 views) Lagos plane crash: Journalist releases victims’ names (132,852 views) Gunmen kill ASP, 2 other police officers in vain bid to kidnap Rivers PDP chieftain (126,101 views)


Categories Advertorials (3) African Press Organisation (81) Art & Literature (35) Business & Economy (2,979) Business Verdict (36) Columnists (817) Complaints & Requests (94) Enterprise & Opportunities (207) Entertainment (456) Features (554) Global Business Monitor (241) International (1,860) Interview (146) Live Commentary (28) Love Matters (114) News (33,836) Opinion (898) Pidgin (10) Politics (4,634) Religion (703) Sports (1,457) Stock Watch (28) AMA & Al Jazeera Global Update



NLNG Science and Literature Prize Awards




Football Highlight -- BARCELONA - CHELSEA 3:0


APO Group Partner




REVEALED: 3 natural ways to get stronger erections, last 25minutes on bed, and increase manhood size without using drugs. Also, Natural Prostrate Enlargement Remedy.. Get In HERE...

GOCOP Accredited Member

GOCOP Accredited member



Africa Media Agency and Al Jazeera