•External reserves down, now $41.9bn

By Babajide Komolafe

The amount of idle cash (liquidity) in the interbank money market fell by 163 per cent last week, causing cost of funds to rise by 28 per cent.

Meanwhile the nation’s external reserves maintained downward trend last week, falling to $41.9 billion as at Thursday from $42.5 billion the previous week.

Vanguard investigation revealed that interbank market liquidity fell from to N232 billion last week from N612 billion the previous week. The sharp decline was prompted by outflow through FGN Bonds and Treasury Bills purchases. The development however, caused cost of funds to rise in the market by 28 percent (or 300 basis points).

According to the interbank newsletter of Kakawa Discount House, interest rate on Open Buy Back (OBB) or Collateralised lending and Overnight lending rose to 13.5 percent from 10.5 percent.

Also reflecting the decline in market liquidity, demand for government securities fell to 88 percent from 146 percent the previous week. Result of trading in government securities (treasury bills) show that total public subscription (demand) stood at N177.63 billion, representing 88 per cent of the N200 billion worth of bills offered by the Central Bank of Nigeria (CBN). The apex bank sold N126 billion and repaid N127.61 billion worth of matured bills.

But the N90 billion worth of FGN Bonds offered by the Debt Management Office (DMO) recorded 205 percent subscription, as public subscription stood at N185 billion.

In the foreign exchange market, the naira appreciated in the interbank segment despite   23.2 percent decline in foreign exchange sold by the CBN at the Retail Dutch Auction System (RDAS) sessions.

From N163.40 per dollar, interbank exchange rate fell to N162.18 per dollar, implying 122 kobo appreciation for the naira.  The naira however remained stable at N155.75 per dollar at the official segment.

Result of the RDAS auctions for last week showed that the apex bank sold $596.71 million, representing 23.2 percent decline from N777.9 million sold the previous week. Cumulatively, the CBN has sold $4.3 billion this year at the RDAS bi-weekly auction.