By Emeka Anaeto, Economy Editor
With the reversal of its monetary policy easing previous month Central Bank of Nigeria, CBN, has deployed monetary instruments freezing about N663 billion in the last one month even as the apex bank is set to mop up additional funds from the banks this week.
The apex bank’s Monetary Policy Committee, at its second meeting this year held in March, voted to review the monetary policy rate, MPR, upward from 11 per cent to 12 per cent.
It also increased the cash reserve ratio, CRR, upward from 20 per cent to 22.5 per cent, while maintaining the liquidity ratio at 30 per cent
The measures were aimed at curbing inflationary pressure which has been attributed to high liquidity in the financial system.
CBN also hoped to curtail huge demands for foreign exchange at its weekly bidding by suppressing liquidity levels in the banks.
The new policy direction took full effect in April with resumption of the Open Market Operation, OMO, and other treasury bills auctions which sucked up N390 billion in the first two weeks sending interbank interest rates and yields upwards.
Though, the apex bank have applied the mop-up measures in line with cash inflows in the banking system, total inflow so far is N270.4 billion in form of maturing OMO funds, leaving a negative flow of N392.6 billion.
This negative flow, however, appears to have been cushioned by inflow of N299.7 billion from the Federation Account Allocation Committee, FAAC.
Though the banking industry is expecting N150.6 billion inflow tomorrow, industry operators are also expecting more CBN instrument to mop it up.