As the shortage of funds continues to plague the interbank money market, Banks now depend on the Central Bank of Nigeria for short-term liquidity.
Reports suggest that borrowing amount has increased 74%, rising from N501 billion to N901 billion in the space of a week.
The central bank lends money to banks through the Standing Lending Facility (SLF) at an interest rate of 100 basis points which is above the Monetary Policy Rate, The apex bank also lends via the Repurchase arrangement that entails the purchase of bank securities and resale at a determined date and predominantly a higher price.
Banks borrowing through the repurchase arrangement increased significantly in the previous week by 84%, almost double its previous value of 331.63 billion from N614.44 billion. Concurrently, borrowing through the Standard Lending Facility increased by N108.2 billion.
However, deposit of surplus funds by banks to the CBN by the way of the Standard Deposit Facility reduced by N11.22 billion from its initial value of N35.75 billion.
The stability realized from the interbank money market was a result of the inflow of N243 billion through treasury bills, which has subsequently matured. The inflow encompassed Nigeria Treasury Bills and Matured Secondary Market Bills of N150 billion and N93 billion respectively.
The N254 billion outflows was mediated by the inflow of N243 billion, Through sales of treasury bills by the Central bank which was composed of N19 billion and N235 billion associated open market operation bills and NTB’s respectively