Financial market watchers have said that the inter-bank rates will drop further this week as a result of excess liquidity in the market.

Analysts at FSDH, in a report made available to our correspondent, said, “We expect Open Market Operation maturity of about N249.70bn to hit the system in the coming week. As a result of the anticipated injection into the system we expect the Central Bank of Nigeria to use OMO to mop up some of the liquidity in the market.

“Also, we expect FGN Bond Re-opening auctions of about N70bn (15.10 per cent FGN April 2017 and 16.39 per cent FGN January 2022) to take place in the market in the coming week. We expect inter-bank rates to drop further because of the liquidity in the market.”

The inter-bank rates moderated downward to end last week. The market was relatively liquid last week despite the withdrawal of about N186.26bn via the government securities market and foreign exchange sales by the CBN.

At the inter-bank market, the seven-day Nigerian Inter-Bank Offered Rate closed last week lower at 10.59 per cent, representing a 12-basis point decrease from the previous week’s figure of 10.71 per cent.

The 90-day NIBOR closed unchanged from the previous week at 11.63 per cent.

At the 91-day Treasury Bill auction, a total of N32.97bn worth of securities was offered and sold to competitive bidders. A total of N24.96bn was sold to non-competitive bidders, bringing total offer and sale to N57.93bn.

The bill was 123.12 per cent subscribed, as N40.59bn worth of bid was received from competitive bids. The bill was issued at a discount rate of 9.20 per cent.

A total of N32.97bn worth of matured bills was repaid into the system, leading to a net outflow of N24.96bn from this segment of the market.

At the 182-day TB auction, a total of N40bn worth of securities was offered and sold to competitive bidders. Also, a total of N30.33bn was sold to non-competitive bidders, bringing the total offer and sale to N70.33bn.

Source: Punch (By Ademola Alawiye)

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Despite an increase in the inflation rate to 12.3 per cent, financial analysts have said that the rate will decline to a single digit in 2013.

FSDH, in a report made available to our correspondent on Wednesday, stated that though inflation rate remained in double digit for December 2012, it would drop to single digit in 2013.

The FSDH Research had noted earlier that inflation rate will remain in double digits throughout the year 2012 as a result of the partial removal of the fuel subsidy in January 2012 coupled with the recent flooding in the country. “Going into 2013, we expect inflation rate to drop to single digit partly on account of base effects,” it said.

Prior to the release of the November inflation figure, the analysts had said that the inflation rate would hit a 12 per cent mark before the end of the year.

It was estimated that Nigeria’s headline inflation would rise considerably by 0.77 per cent to 12.47 per cent in November, from the 11.7 per cent recorded in October.

The latest Composite Consumer Price Index for the month of November 2012, released by the National Bureau of Statistics, showed that inflation rate year-on-year in Nigeria increased to 12.30 per cent in November 2012 from 11.7 per cent recorded in the month of October 2012.

According to the NBS, the CCPI stood at 140 points in November 2012, an increase from 139.2 points recorded in October 2012. The percentage change in the average CCPI for the 12-month period ended November 2012 over the average of the CCPI for the previous twelve-month period was 12.1 per cent, compared with 11.9 per cent in the month of October.

The Lagos Chamber of Commerce and Industry recently faulted the position of the MPC of the Central Bank of Nigeria over the retention of the benchmark lending rate at 12 per cent.

The LCCI, in a statement signed by its Director-General, Mr. Muda Yusuf, said the MPC’s decision to retain a regime of tightening was ill-advised and insensitive.

He said, “The reality of the current economic and business conditions is a cause for concern – escalating unemployment crisis; profit margins are declining; consumer demand is weak; prohibitive interest rates; decelerating economic growth and high mortality rate of small businesses.

“These conditions call for policy choices that would stimulate the economy, even at the risk of inflation. Boosting economic activities would increase output and invariably moderate inflation. We appreciate the concern of the CBN about inflation, exchange rate stability and the preservation of foreign reserves. However, given the present socio economic conditions, stimulating the economy should be paramount at this time.”

Source: Punch (written by Ademola Alawiye)

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Nigeria’s central bank has issued the country’s first merchant banking licences in more than a decade to South Africa’s FirstRand and local firm FSDH, it said on Friday.

They are the first since the regulatory distinction between merchant and commercial banking was axed twelve years ago.

Following many Western countries, Nigeria allowed commercial and investment banks to merge their operations in 2000.

But it scrapped this universal banking model two years ago in the wake of a financial crisis that nearly sank nine lenders and forced the central bank to spend $4 billion in a rescue.

The country has now reverted to having a firewall between retail banking and the speculative capital market business.

“We have issued banking licence to Rand Merchant bank Nigeria and FSDH to operate as merchant Bank,” Ugochukwu Okoroafor, the central bank’s director of communication, said.

FirstRand declined to comment on the license while FSDH, which currently runs asset management operations in Nigeria, said it will start merchant banking operations by the first quarter of next year.

Source Reuters (Reporting by Chijioke Ohuocha and Oludare Mayowa; Additional rpeorting by Helen Nyambura in Johannesburg; Editing by Tim Cocks)

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