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$4.31b FX Was Sold To Dealers In 2016 Q2—CBN

CBN economic report

By Modupe Gbadeyanka

The Central Bank of Nigeria (CBN) has released the economic report for the second quarter of 2016.

In the report seen by Business Post, growth in the key monetary aggregates accelerated in the second quarter of 2016.

The apex bank said during the period under review, provisional data showed that foreign exchange inflow and outflow through it amounted to US$5.89 billion and US$6.09 billion, respectively, resulting in a net outflow of US$0.20 billion.

It further said foreign exchange sales by it to the authorized dealers amounted to US$4.31 billion in the second quarter of 2016. It explained that the average exchange rate of the naira vis-à-vis the US dollar at the inter-bank was N209.13/US$.

CBN also said over the level at the end of the preceding quarter, broad money supply, (M2), grew by 5.9 percent.

It explained in the report that the development reflected the increase in net foreign assets, domestic credit (net) and other assets (net) of the banking system, respectively.

Similarly, narrow money (M1), grew by 0.9 per cent over the level at the end of the preceding quarter.

Developments in banks’ deposit and lending rates were mixed during the second quarter of 2016. The spread between the weighted average term deposit and maximum lending rates widened to 21.43 percentage points at the end of the second quarter of 2016.

Similarly, the margin between the average savings deposit and the maximum lending rates widened to 24.10 percentage points.

At the inter-bank funds segment, the weighted average inter-bank call rate rose by 12.55 percentage points to 15.56 per cent in the second quarter of 2016, reflecting the liquidity condition in the banking system.

The total value of money market assets outstanding at the end of the second quarter of 2016, stood at N10,460.66 billion, showing an increase of 6.7 per cent, compared with the level at the end of the first quarter of 2016. The development reflected the 8.09 and 2.73 per cent increase in FGN bonds and treasury bills, respectively.

Developments on the Nigerian Stock Exchange (NSE) were mixed in the review quarter.

At N1,159.05 billion, total federally-collected revenue was 51.3 and 8.6 per cent lower than the quarterly budget estimate and the preceding quarter’s receipts, respectively. At N537.19 billion or 46.3 per cent of the total, gross oil receipt was lower than both the provisional quarterly budget and the receipts in the preceding quarter.

The development was attributed to the continued fall in receipts from crude oil/gas exports arising from persistent low price of crude oil and incidences of shut-ins and shut-downs at some NNPC terminals, owing to pipeline vandalism. Non-oil receipts, at N621.86 billion or 53.7 per cent of the total, was above the level in the preceding quarter by 3.2 per cent, but was significantly lower than the proportionate quarterly budget.

Federal Government retained revenue was N677.88 billion, while total expenditure was N1,768.85 billion, resulting in an estimated deficit of N1,090.96 billion in the second quarter of 2016, compared with the proportionate quarterly budget deficit of N555.49 billion.

The CBN said in the report that agricultural sector activities increased due to well distributed rainfall in most parts of the country. Major activity in the South was harvesting of maize and yam, while planting and off-season harvesting dominated in the North. In the livestock sub-sector, farmers engaged in the breeding of poultry and migration of cattle from North to South in search of green pastures. The end-period inflation rate on year-on-year and 12-month moving average basis for the second quarter of 2016, was 16.5 per cent and 11.4 per cent, respectively.

World crude oil demand and supply were estimated at 93.25 mbd and 94.34 mbd, respectively, in the second quarter of 2016. Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.54 million barrels per day (mbd) or 141.68 million barrels (mb) for the second quarter of 2016. Crude oil export was estimated at 1.09 mbd or 100.28 million barrels, while deliveries to the refineries for domestic consumption remained at 0.45 mbd or 41.40 million barrels during the review quarter.

The average price of Nigeria’s reference crude, the Bonny Light (370 API), was US$46.44 per barrel in the review quarter.

Global growth remained modest and uneven. Risks to the global outlook remained tilted to the downside, due to ongoing adjustments in the global economy, general slowdown in emerging market economies, China’s rebalancing, lower commodity prices and gradual exit by the US from extraordinarily accommodative monetary policy.

Other major international economic developments and meetings of importance to the domestic economy during the review period included: The 2016 Spring Meetings of the Board of Governors of the World Bank Group (WBG), the International Monetary Fund (IMF) and the Inter-Governmental Group of Twenty-Four (G-24) on International Monetary Affairs and Developments held from April 11 – 18, 2016 in Washington D. C., USA. Also, the 2016 continental seminar of the Association of African Central Banks (AACB) was held from May 9 -11 2016 in Cairo, Egypt, on the theme “Financial stability: New Challenges for Central Banks.

Finally, the 51st Annual Meetings of the African Development Bank (AfDB) and the 42nd Meetings of the Board of Governors of the African Development Fund (ADF) were held from May 23 – 27 2016 in Lusaka, Zambia.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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