Naira currency notes

By Obinna Chima

The Nigerian Interbank Offered Rates (NIBOR) fell to an average of 13.67 per cent on Friday, compared with the 17.18 per cent it attained the preceding Friday as funds from the Federation Account Allocation Committee (FAAC) hit the system.

FAAC had the preceding Friday, shared a total distributable revenue, including value added tax (VAT) of N527.443 billion among the three tiers of government in August.
Consequently, data made available by the Financial Market Dealers Association (FMDA) showed various rates at the short-term market for borrowing among commercial bank edged southward.

For instance, while the overnight tenor reduced to 10.87 per cent on Friday, from 16.42 per cent the preceding Friday, the 7-day tenor also declined to 11.46 per cent on Friday, from 16.71 per cent the preceding Friday. Similarly, just as the 30-day tenor slipped to 13.67 per cent on Friday, from the 16.96 per cent it attained the preceding Friday, the 60-day tenor also closed at 14.29 per cent on Friday, from 17.21 per cent the preceding Friday.

Dealers said the market opened with a cash balance of about N317 billion on Friday, compared with a negative balance of N42 billion the preceding Friday.
They predicted that NIBOR would be stable this week as a result of the strong liquidity position of the market.

Forex Transactions
At the bi-weekly auction, the Central Bank of Nigeria (CBN) offered a total sum of $360 million last week. This represented a slight decrease by 5.26 per cent compared with the $380 million that was offered the preceding week.  At the bi-weekly auction, the naira was stable at N155.87 to a dollar. However, it appreciated at the parallel market as it moved from N159.40 to a dollar to N159 to a dollar. But the local currency shed 27 kobo at the interbank market to close at N157.82 to a dollar/US$1.


Treasury Bills
According to a report by FSDH Securities Limited, at the 91-day Treasury Bill (TB) auction, a total of N37.5 billion worth of securities was offered and sold to competitive bidders, while a total of N23.8 billion was sold to non-competitive bidders, bringing total offer and sale to N61.3 billion.

FSDH revealed that the bill was 206.47 per cent subscribed as N77.4 billion worth of bid was received from competitive bid.
“Due to the level of subscription, the applied stop rate was reviewed downward by 164 basis points to 12 per cent from 13.64 per cent at the previous auction. A total of N37.5 billion worth of matured bills was repaid into the system, leading to a net outflow of N23.8 billion from this segment of the market.

“At the 182-day TB auction, a total of N63.73 billion worth of securities was offered and sold to competitive bidders, while a total of N25.2 billion was sold to non-competitive bidders, bringing total offer and sale to N88.9 billion. The bill was 225.13 per cent subscribed as N143.5 billion worth of bid was received from competitive bidders.

“The bill was issued at a discount rate of 12.6 per cent a 120 basis point decrease from 13.8 per cent at the previous auction. A total of N63.7 billion worth of matured bills was repaid into the system, leading to a net outflow of N25.2 billion from this segment of the market,” the firm stated in its latest weekly report.

Bond Market
At the re-opening of the 5-year FGN Bond auction with a maturity date of April 27, 2017, the CBN offered and sold a total of N30 billion, while it was 121.33 per cent subscribed at N36.4 billion. The Bond carried a marginal rate of 12.93 per cent. Also at the re-opening of the 7-year FGN Bond auction with a maturity date of June 29, 2019, the CBN offered and sold a total of N30 billion, while it was 151.23 per cent subscribed at N46.57 billion. The Bond carried a marginal rate of 12.9 per cent.

AMCON’s Debtors
In a move aimed at strengthening financial stability and instilling discipline in the banking sector, THISDAY reported last week that the CBN had barred commercial banks in the country from extending further credit to 113 companies and 419 directors/shareholders, including those belonging to Mr. Femi Otedola, Alhaji Sayyu Dantata, Mr. Johnson Arumemi-Ikhide, former Power Minister, Prof. Bart Nnaji, Mrs Elizabeth Ebi, and Dr. Wale Babalakin.

The CBN had arrived at this decision as a result of the reluctance by the debtors to pay back their loans despite the purchase of the debts at an agreed price by the Asset Management Corporation of Nigeria (AMCON).

The central bank had stated that the restriction would apply to individuals, organisations, companies as well as principal shareholders and directors of companies where the outstanding value of loans purchased by AMCON amounted to N5 billion or above as at the day of purchase, without regard to the actual amount paid by AMCON.

Currency Restructuring
President Goodluck Jonathan last week directed the CBN to stop further action on the proposed currency restructuring exercise, including the introduction of the N5,000 banknote.

The CBN Director, Corporate Communications, Ugochukwu Okoroafor, had stated that the banking system regulator said that in compliance with the CBN Act, 2007, it had proposed and obtained the approval of the president to embark on the currency restructuring exercise on December 19, 2011.

It added that in full compliance with the provisions of the law, further action on the said restructuring exercise has been stopped, until such a time that the president may direct otherwise.

The central bank had stressed that till date, no contract had been awarded whatsoever by the CBN in connection with the minting and printing of the new coins and notes.

Economic Growth
The Nigerian economy grew by 6.28 per cent in the second quarter of this year, driven by non-oil sector growth, while inflation fell for the second straight month in August helped by tight monetary policy, the National Bureau of Statistics (NBS) said last week. GDP growth accelerated in the second quarter, up from 6.17 per cent in the first quarter, which was the lowest quarterly rise in three years.

“The non-oil sector was driven by growth in activities recorded in the building and construction sector, while oil sector output decreased, compared to the second quarter of 2011,” the NBS had said.

The Consumer Price Index (CPI) had dropped to 11.7 per cent year-on-year in August, down from 12.8 per cent in July, largely due to a fall in food inflation which dropped to 9.9 per cent in August from 12.1 per cent the previous month. Average crude oil output from Africa's largest producer rose marginally to 2.38 million barrels per day (bpd) in the second quarter, from 2.35 million bpd in the first quarter. This was down from 2.45 million bpd in the second quarter of last year.

Nigeria’s Export
The Nigerian Export Promotion Council (NEPC) said last week that the country exported non-oil products valued at $1.35 billion for the first half of 2012. Executive Director of NEPC, Mr. David Adulugba, had said the figure represented about 10 per cent decline from the $1.50 billion recorded in the same period in 2011.  Adulugba had attributed the decline to unrecorded exports, the fuel crisis and workers’ strike in January. He had also expressed optimism that the agency would achieve its 40 per cent target for non- oil export products before the end of the year.  The NEPC boss had noted with concern that the high incidence of unrecorded exports had been a major challenge to accurate reporting of the performance of the non-oil sector in the country. To address the challenge, Adulugba said the Federal Ministry of Trade and Investment was making moves to establish border markets at some strategic locations.   

Cashless Policy
Head, Payment Systems Development Group, the World Bank, Mr. Massimo Cirasino, is billed to visit Nigeria, in October, to speak on the current cashless policy of the Federal Government, at a conference in Lagos. Cirasino would be speaking alongside the Vice-President, Global Mobile Solutions, Citibank, USA, Mr. Kevin Brown. The conference is being organised by De Novo (a strategy brand and media firm) and Legal Reach, a UK law firm.