GTB 737 banner Yudala 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

Views: 2,312


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


 

CLASSIFIED ADS

Let us build the most comprehensive online database of worthy and credible Nigerians from all walks of life. It is worth doing!

Loss Off Your Belly Fats, Upper Arm Fat and Body Fats In 2weeks Time.. Click HERE To Start Now!

 

You may also like...
TuFace, D’ Banj, Inyanya, others banned: Their music...

Kaduna beggars threaten to occupy Government House •Give...

Dangote proffers solution to economic recession as S&P...

Military Invasion of Abia State: Gov. Okezie Ikpeazu...

APC NEC ratifies Na’Allah’s appointment as BoT member...

Lagos defends involvement of foreign firms in waste...

Programmes to discourage examination malpractice still ongoing —...

Herdsmen kill 18 in Benue, poison water sources...

Nigerian housewife faces divorce because of MMM

TechPlus: Organisers unveil plan for 2016 event

Troops intercept terrorists disguising as IDPs

Ex-governorship candidate, 5,000 others dump PDP for APC...

 

Latest News Promotion galore in the Nigerian Army •57 Majors and 66 Lieutenant Colonels among beneficiaries Davido’s men open up on Tagbo’s death •Why they dumped his body in the hospital and fled Troops ambush Boko Haram fighters; kill 3, recover weapons FG assures on 2nd Niger Bridge, Enugu/Onitsha expressway Man who jumped into Lagos Lagoon identified Kebbi Accountant-General bags 70 years jail term over N1.6bn fraud US, UK biggest recipients of looted funds from Nigeria Lagos to gets special court for commercial disputes •New CJ vows to stamp out corruption, uphold rule of law Magu decries celebration of corruption N9.7bn NAF Fraud: Finance Director indicts ex-Chief of Air Staff Osun commissions university road •How Alakija's N250m donation rescued project Hackers hit 30 million internet users in South Africa’s ‘worst data breach’

 

Most Read Nigerian female sex addict opens up, says ‘I like it with both men and women’ (287,601 views) NUDE PHOTO OF OMOTOLA JALADE-EKEINDE surfaces online (270,223 views) Shameless Genevieve Nnaji exposes breasts in public (218,256 views) Finally named: The full list of friends of Nigerian female sex addict who prowled Facebook (183,659 views) Igbo scholar disgraces Femi Fani-Kayode •Demolishes claims on Igbo/Yoruba history with facts and figures (179,436 views) OLUMBA OLUMBA OBU (the one who called himself God) IS DEAD (162,070 views) Breaking News: POPULAR REVEREND CONVERTS TO ISLAM in Kaduna (Nigeria) (140,525 views) THE FINAL DISGRACE: Igbo scholar unleashes more facts about Igbo/Yoruba history, finishes off Femi Fani-Kayode with second article (128,693 views) OBJ’s son reported dead in Lagos plane crash •Names of more victims emerge (123,594 views) Lagos plane crash: Journalist releases victims’ names (114,126 views) Gunmen kill ASP, 2 other police officers in vain bid to kidnap Rivers PDP chieftain (112,129 views) APC cries foul as PDP’s Fayose takes early lead in Ekiti governorship election (104,488 views)

 

Categories Advertorials (3) African Press Organisation (81) Art & Literature (30) Business (2,728) Business Verdict (24) Columnists (757) Complaints & Requests (93) Enterprise & Opportunities (183) Entertainment (395) Features (497) Global Business Monitor (187) International (1,581) Interviews (134) Live Commentary (28) Love Matters (79) News (29,498) Opinion (826) Pidgin (8) Politics (3,988) Religion (645) Sports (1,338) Stock Watch (23) AMA & Al Jazeera Global Update

 

UBA mobile app

CBN Advert

 

 

#MonkeyPox outbreak

 

APO Group Partner

 

CLASSIFIED ADS

Let us build the most comprehensive online database of worthy and credible Nigerians from all walks of life. It is worth doing!

Loss Off Your Belly Fats, Upper Arm Fat and Body Fats In 2weeks Time.. Click HERE To Start Now!

GOCOP Accredited Member

GOCOP Accredited member

 

 

Africa Media Agency and Al Jazeera

Advertisement



 

 

CLASSIFIED ADS

Let us build the most comprehensive online database of worthy and credible Nigerians from all walks of life. It is worth doing!

Loss Off Your Belly Fats, Upper Arm Fat and Body Fats In 2weeks Time.. Click HERE To Start Now!