CBN again holds benchmark interest rate at 11.5% amid declining inflation

The Central Bank of Nigeria (CBN) on Tuesday retained its benchmark interest rate at 11.5 percent amid improvement in inflation. This comes not as a surprise as analysts in the financial services sector had expected a hold following weak growth amid declining inflation

Investors lose N24bn as Nigeria’s stock market closes in red

Nigeria’s stock market closed southwards on as investors expectedly moved to take profit after recent gains.

At the close of trading, the market recorded 20 gainers led by Oando Plc (+43kobo or 9.86percent) as against 21 losers led by UPDC REIT (-40kobo or 6.67percent).

The market had recorded remarkable gains in previous trading sessions as investors positioned ahead of interim dividend. Many investors moved into the Bourse to cherry pick value stocks across different sectors, particularly those known for paying interim dividends.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation decreased on Tuesday by 0.12percent or N24billion from 38,849.08 points and N20.240trillion respectively to 38,802.15 points and N20.216trillion.

The market’s negative return year-to-date (YtD) increased to -3.65percent. This month, the market has increased by 2.36percent, while it has rallied by 0.35percent.

Access Bank, Wema Bank, UPDC REIT, UACN and UBA Plc were actively traded stocks Tuesday on the Nigerian Exchange Limited. In 4,326 deals, investors exchanged 243,086,071 units valued at N1.899billion.

CBN halts dollar sales to BDCs

In an announcement after the July MPC meeting, Nigeria’s central bank governor, Godwin Emefiele, announced that the CBN bank will no longer sell foreign exchange to bureau de change operators (BDCs).

The CBN will also no longer issue fresh licenses to BDCs

The governor said that that the central bank sells about $110 million to BDCs every week. Going forward, those funds will be made available to commercial banks to meet genuine demand for foreign exchange.

Going forward, banks will reorganize their operations to cater to customers who used to patronize BDCs.

Emefiele said the banks must make every effort to meet genuine demand as soon as possible.

With this move, the CBN seeks to reign in speculative demand for foreign exchange and take on the challenge of meeting all genuine demand.

Improved Liquidity Spurs Investors Interest in Fixed Income Assets

Liquidity in Nigeria’s Fixed income market rose significantly for July 2021 as investors reengage domestic financial markets more actively. Fixed income buying interest spun upwards in July on the back of a three-month decline in the national domestic headline inflation rate, which fell from 17.83% in May to 17.75% in June 2021. 

The market retailer said investors were optimistic that the Central Bank of Nigeria (CBN) would hold the monetary policy rate at 11.5% as it hopes that the country’s output (GDP) continues to grow as the inflation drops steadily year on year. With the inflation rate sliding, nominal interest rates are expected to fall causing bond prices to rise.