By Babajide Komolafe
*N43 trillion cheques cleared in 2008
The interbank interest rate remained high last week touching the 22 per cent mark inÂ defiance ofÂ the guarantee on interbank lending offeredÂ by the Central Bank of Nigeria (CBN).
At the close of business on FridayÂ interest rate on Overnight lending indeed stood atÂ 22 per cent against 215 per cent the previous week. While interest rate on Seven days lending clsoed atÂ 21.79 per cent as against 21.4 per cent. Money market operators said that the interest rate are yet to respond to the guarantee because they are not yet clear about the implementation of the policy measure. They saidÂ that the guarantee already has a condition which makes it less exiting to the market.Â Vanguard investigation revealed that scarcity of fund intensified in the market during the week and this occasioned zero patronage in government securities.
At the parallel market the Naira depreciated against the dollar by 300 kobo as the exchange rate rose to N151 per dollar from N151 per dollar. Bureaux De Change Operators attributed the depreciation to scarcity of foreign exchange. They said that the CBN has not sold dollar to any class of BDC this week and this occasioned scarcity in the market. They said the situation would change as soon as the apex bank start selling foreign exchange to all categories of BDCs as announced by the Governor on Tuesday.
Meanwhile the value of cheques cleared rose to N43 trillion in 2008 while interbank transfers rose to N73 trillion.
The Central Bank of Nigeria in its 2008 annual report said, â€œThe performance of the cheque clearing system improved further in 2008, following the harmonization of the clearing cycle, which effectively reduced the up-country clearing cycle to T + 2. Furthermore, the number of clearing centres increased with the commencement of clearing activities in Awka, Asaba, Umuahia, Lokoja, Oshogbo and Gombe. Consequently, the volume and value of cheques cleared rose significantly by 51.6 and 54.2 per cent above the levels in the preceding year to 30.2 million and N43,357.4 billion, respectively. Lagos, Ibadan, Abuja and Port Harcourt clearing centres maintained their lead in respect of cheques cleared in the system, accounting for 42.0, 27.8, 5.5 and 4.0 per cent and 44.5, 16.4, 10.3 and 6.0 per cent, respectively, of the total volume and value. The volume of transactions at the inter-bank market increased significantly in 2008. This was evident in the volume and value of inter-bank transfers through the CBN Inter-bank Funds Transfer System (CIFTS), which increased by 53.2 and 12.9 per cent to 220,326 and N73,076.4 billion, respectively. Third party transfers accounted for 67.4 per cent of the total volume of transfers, compared with 53.5 per cent in the preceding year.
The development was due to the use of CIFTS for Federal Inland Revenue Services (FIRS), remittances by DMBs, and BDCs for their transactions. The proportion of inter-bank transfers to the total CIFTS transactions declined to 30.2 per cent from 41.6 per cent in the preceding year. The development was attributable to the tight liquidity condition in the banking system, especially in the last quarter of 2008.