CBNInterbank cash market liquidity falls 95%Naira depreciates to N459/$ in parallel market
By Babajide Komolafe
The interbank cash market has been gripped with intense shortage of funds as quantity of idle cash (liquidity) out there fell by 95 p.c, prompting banks to besiege the Standing Lending Facility, SLF, of the Central Bank of Nigeria (CBN) for brief time period cash wants.
Monetary Vanguard investigations revealed that the extent of liquidity within the interbank cash market fell to N30.9 billion on the shut of enterprise on Friday from N617.eight billion the earlier week, indicating 95 p.c decline.
The sharp fall in market liquidity was prompted by absence of main liquidity influx into the market throughout the week.
In consequence, many banks have been compelled to borrow from the apex bank’s SLF window to satisfy fast cash wants.
Confirming this growth, analysts at Zedcrest Securities Restricted, mentioned: “The interbank market remained illiquid, with most banks stuck at the SLF window amidst tight liquidity.”
Consequently, price of funds remained excessive, and closed at double-digit degree on Friday. Knowledge from FMDQ confirmed the rate of interest on Collateralised (Open Purchase Again, OBB) lending closed at 15.2 p.c, three foundation factors (bpts) up from 15.17 p.c the earlier week. Rate of interest on In a single day lending additionally closed at 16.1 p.c, 57 bpts down from 16.67 p.c the earlier week.
In the meantime, the naira, final week, depreciated within the parallel marketplace for the second consecutive week, because the market exchange fee rose by N3.5 to N459 per greenback on Friday from N455.5 per greenback the earlier week. The continued depreciation of the naira is pushed by greenback shortage triggered by suspension of greenback gross sales to bureaux de adjustments (BDCs) since March 25th 2020.
However the naira appreciated final week within the Buyers and Exporters (I&E) window by 17 kobo because the indicative exchange fee for the market dropped to N386.33 per greenback on Friday from N386.5 per greenback the earlier week.