The Central Bank of Nigeria (CBN) has said average daily deposit amount of N84.27 billion in 246 transaction days in 2018 dropped to N48.32 billion in 251 transaction days in 2019.
Deposit Money Banks (DBM) and merchant banks through the Standing Deposit facility (SDF) deposit funds with the apex bank at a given interest rate.
The annual activity report by the CBN released on Friday stated that , “Patronage at the SDF window decreased to an average daily amount of N48.32 billion in 251 transaction days in 2019, from N84.27 billion in 246 transaction days in 2018.
“Similarly, the average daily interest payments on the deposits decreased to N17.22 million from N30.51 million in 2018. The reduction in volume of transactions for the year was due to the change in remunerable SDF from N7.50 billion to N2.00 billion per day per participant.”
Also on Standing Lending Facility (SLF), the report explained that, “The average daily request for SLF was N81.06 billion in 238 transaction days, of which ILF conversion averaged N30.76 billion or 37.94 per cent of average daily requests.
“The average daily interest charged was N55.13 million. In 2018, the average daily request for SLFwhichsoever was N48.44 billion in 234 transaction days, of which ILF conversion was N30.43 billion or 62.82 per cent, while average daily interest income stood at N35.81 million.
“The higher recourse to the lending window in 2019 was traceable to January, February and August, when market participants accessed the SLF to meet their shortfalls and comply with CBN’s monetary and prudential requirements.”
The report stated that in 2019, DMBs and merchant banks MBs had access to standing facilities to square-up their positions by borrowing at the SLF or depositing excess funds at the SDF at the end of each business day.
The report stated that, ”The trend showed more frequent recourse to the SLF, despite increased net system liquidity in comparison to 2018. Increased patronage was recorded in January and February as well as August 2019, due to market participants’ desire to meet monetary and prudential regulatory requirements.
“In July 2019, the remunerable threshold for daily deposits per institution at the SDF reduced to N2.00 billion from N7.50 billion.
“The reduction was to curtail unbridled requests by market participants and encourage inter-bank transactions and lending to the real economy.
“Applicable rates for the SLF and SDF were anchored to the downward review of the MPR, from 14.50 to 13.50 per cent in March 2019.
“Consequently, the SLF and SDF rates changed to 15.50 and 8.50 per cent from 16.00 and 9.00 per cent in 2018, respectively.”
The apex bank in the same report disclosed that total sales at the inter-bank foreign exchange market stood at $23.89billion in 2019
CBN said it sustained direct intervention in the inter-bank foreign exchange market by providing a buffer against demand pressures to ensure exchange rate stability.
According to the report, “Total sales stood at $23.89billion, comprising $13.1 billion as spot and $10.78 billion forwards.
“The spot sales comprised $6.04 billion at the I&E window, $4.27 billion at the inter-bank, $1.67 billion for SMEs and $1,123.10 million for invisibles.
“On the other hand, the Bank purchased $11.04 billion. Thus, net sales by the Bank amounted to $12.8 billion.
“The sum of $10.08 billion matured at the forwards, while $3.48 billion remained outstanding at end-December 2019.”
The report added that,, “ In the preceding year, total sales stood at $25.6 billion, comprising $14.6 billion as spot and $11.0 billion as forwards, while purchases amounted to $7.8 billion, resulting in a net sale of $17.87 billion.
“The sum of $10.4 billion matured at the forwards, while $2.76 billion remained outstanding at end-December 2018
“The lower sales into the foreign exchange market by the CBN in 2019 was attributable to the increased level of activity at the I&E window.”
However, the report stated that, “The total request for repo transactions in 2019 was N1,667.81 billion, an increase of 68.50 per cent from N989.61 billion in 2018.
“The applicable interest rates ranged from 18.50 to 19.50 per cent for the 4- to 90- day tenors, same as in the preceding year.
“Consequently, total interest earned on repo in 2019 increased by 76.90 per cent from N23.55 billion in 2018 to N41.66 billion .
“The increase in request for repo transactions in 2019 was noticeable in the second half of the year, due to some market participants’ response to the Bank’s monetary operations.”
