Banks’ Rates Climb over Fuel Subsidy Removal

19 Mar 2012

Views: 2,154

Font Size: a / A

Goodluck-Jonathan-03099.jpg - Goodluck-Jonathan-03099.jpg

President Goodluck Jonathan

By Obinna Chima

Deposit and lending rates in the banking industry rose marginally in February due to the impact of the partial fuel subsidy removal.

The Financial Market Dealers Association (FMDA) monthly economic and financial report for February, made available to THISDAY at the weekend, showed that deposit and lending in the month under review, rose slightly across various placement periods in the industry as saving rate averaged at 2.3335 per cent, as against the 2.3173 per cent in the previous month.

President Goodluck Jonathan had on January 1, 2012, announced full removal of fuel subsidy which raised fuel price to about N140 per litre, as against the previous price of N65 per litre. But the policy was later relaxed following a nationwide protest and pump price was kept at N97 per litre.
Analysts at the Financial Derivatives Company Limited (FDC) had predicted that the impact of the partial removal of the fuel subsidy would fully manifest in the market in February.

However, the FMDA report showed that on the lending segment, rates for the prime structured loan, was stable at a monthly average of 17.9773 per cent, compared with its January position; while the normal structured loan rose to 20.8095 per cent from 20.7381per cent recorded in the previous month.

“Rates are expected to moderate around this band the coming months as the monetary authority met end- January but retain key monetary indices,” the FMDA report added.

It also revealed that in terms of inflow into the system, the month recorded N332.53 billion, as against the N256.53 billion in the preceding month.
“The net withdrawal stood at N228.14 billion relative to N342.08 billion recorded the previous month. The sustenance of the quantitative tightening policy occasioned by the need to ensure price and exchange rate stability resulted in the continued mop-up of liquidity in the system via Primary Market Auction (PMA) and Open Market Operation (OMO).

“The apex bank sold N298.92 billion against N175.98 billion bills in January 2012. Subscriptions in the month rose to N793.72 billion, as against N350.872 billion in previous month.

“What accounted for the increase in sales and public subscription could be hinged on liquidity surge in the system. At the first auction in the month, 91 days, 182 days and 364 days bills were allotted at 14.70 per cent, 16.097 per cent and 16.899 per cent respectively, as against 15.00 per cent, 16.989 per cent and 17.200 per cent respectively in January,” it explained.

It further said that the supply of forex at the Wholesale Dutch Auction System window moderated as the Central Bank of Nigeria (CBN) offered a total of $2 billion and sold $1.847 billion, as against $1.919 billion sold in January 2012. 

Tags: Nigeria, Featured, Business, Goodluck Jonathan

Comments: 0


Add your comment

Please leave your comment below. Your name will appear next to your comment. We'll also keep you updated by email whenever someone else comments on this page. Your comment will appear on this page once it has been approved by a moderator.

comments powered by Disqus