17 January 2013

Nigeria: CBN Sells U.S.$108 Million At Dutch Auction

Lagos — The Central Bank of Nigeria, CBN, yesterday, sold $108 million at the bi-weekly foreign exchange auction.

This came as the non release of statutory allocation funds by the Federation Accounts Allocation Committee, FAAC, as expected yesterday caused interbank interest rates to rise significantly.

In another development, the CBN has revoked the licences of 236 Bureau de Change, BDC, operators due to non-payment of the mandatory deposit of $20,000.

The revocation was announced by the Director, Trade & Exchange Department, Batari Musa, in a statement entitled: "Revocation of Operating Licences of 236 BDCs."

He said: "The licences of 236 BDCs have been revoked. Consequently, all authorized dealers/buyers and the general public is advised that with effect from January 14, 2013, any foreign exchange transaction, including sales to and purchases from these BDCs as well as transfer of funds through them and or on their behalf are illegal."

CBN sells $108m at Dutch Auction System

Result of the Wholesale Dutch Auction System, WDAS, session conducted by the CBN, yesterday, showed that the amount of foreign exchange sold by the apex bank rose 195 per cent to $108.5 million as banks besieged the official market to take advantage of the official exchange rate which is lower than the interbank exchange rate. Despite the surge in demand, the official exchange rate remained stable at N155.72 but the interbank exchange rate rose slightly to N157.28 from N157.24 on Tuesday.

FAAC delay pushes up interbank rates

On the other hand, interbank interest rate rose by over 100 basis points (bpts) due to delay in the release of the statutory allocation funds from FAAC.

Interbank operators had expected the funds to be released, yesterday. This coupled with outflow of liquidity for foreign exchange purchases and treasury bills purchases, caused scarcity of funds, and rise in interest rates.

Interest rate on overnight borrowing rose by 150 bpts to 14.63 per cent, while that of 7-Days rose by 133bpts to 14.83 per cent. This trend is, however, expected to be reversed today when the statutory allocation will hit the market.

NSE appreciates by N1.30bn

Meanwhile, the value of equities listed on the Nigerian Stock Exchange, NSE, appreciated by N130.13 billion, yesterday, on the back of sustained investors patronage.

Specifically, the market capitalisation rose by 1.37 per cent to close at N9.62 trillion as against N9.49 trillion recorded in the previous day.

Another market indicator, the All Share Index, rose by 1.34 per cent to close at 30,098.83 points from 29,686.95 points it opened.

Forty seven equities recorded share price appreciation as against 50 equities in the previous day while 13 equities recorded share price depreciation as against eight losers in the previous trading day, suggesting a positive market breadth.

Meantime, the volume of equity transactions declined by 24.36 per cent, recording 622.32 million shares valued at N4.97 billion exchanged in 7,446 deals in contrast to 822.69 million shares valued at N5.06 billion exchanged in 7,379 deals.

The Financial sector led the market transaction volume with 504.91 million shares valued at N3.72 billion in 5,055 deals as against 734.21 million shares valued at N3.95 billion in 4,987 deals recorded in previous session.

This was followed by the Conglomerates sector with 40.44 million shares traded in 201 deals while Consumer Goods sector recorded 34.13 million shares in 1,172 deals to close with third position on the chart.

The volume recorded in the sector was driven by transaction in the shares of United Bank of Africa Plc, UBA; Diamond Bank Plc, FBN Holding Plc, Fidelity Bank Plc and NEM Insurance Company Nigeria Plc. The total volume of 275.27 million shares valued at N2.09 billion traded in the five stocks accounted for 43.23 per cent of the entire market volume.

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