Currency in circulation fell by 7.6 percent from N1,631.71 in fourth quarter 2012 to N1,508.51 billion, at the end of the first quarter of 2013, and in contrast to the growth of 20.9 percent at the end of the corresponding quarter, the Central Bank of Nigeria (CBN) has said.
The development was attributed, largely, to the 4.5 percent decline in currency outside the banking system.
The Economic Report for first quarter of 2013 revealed that total deposits at the CBN amounted to N6,396.32 billion, indicating a decline of 0.13percent, in contrast to the growth of 6.9 percent at the end of the preceding quarter. The development reflected largely, the 0.23 and 0.18 percent fall in the deposits of the private sector and Federal Government, respectively, which more than off-set the marginal increase in deposits of Deposit Money Banks (DMBs). According to the report, of the total deposits, the shares of the Federal Government, banks and “others”were N3,879.67 billion (61.0percent), N1,986.67billion (31.0 percent) and N529.96 billion (8.0 percent), respectively.
Though DMBs’ deposit with CBN rose during the review period, reserve money (RM) fell by1.1 percent to N3,495.18 billion, from N3,532.10 billion at the end of the preceding quarter, owing to the 7.6 percent decline its currency in circulation component, which more than offset the rise in DMBs deposit with the CBN.
During the review period, money market rates were influenced by the liquidity condition in the banking system as Monetary Policy remained largely restrictive. In line with the monetary tightening stance of the authority, the Monetary Policy Rate (MPR) was maintained at 12.0 percent.
The Cash Reserve Ratio (CRR) and Liquidity Ratio (L/R) were also maintained at their previous levels of 12.0 and 30.0 percent, in the review quarter. Similarly, the Net Open Position (NOP) was also retained at 1.0 percent, while money market indicators, particularly short tenored instruments were relatively stable during the review period. The Bank’s discount window also remained open to authorised dealers to access both the standing deposit facility (SDF) and standing lending facility (SLF). Provisional data indicated that the value of money market assets outstanding for the first quarter of 2013 stood at N6,168.65 billion, showing a decline of 0.7 percent, in contrast with the increase of 3.1 percent at the end of the preceding quarter. The development was attributed, largely, to the 6.4 percent decline in Federal Government Bonds.
On the other hand, provisional data on foreign exchange flows through the CBN showed that inflow during the first quarter of 2013 amounted to US$10.50 billion, representing a decline of 6.0 and 13.3percent below the levels in the preceding quarter and the corresponding period of 2012, respectively. Outflow amounted to US$6.44 billion, reflecting a decline of 17.6 and 34.0 percent below the levels in the preceding quarter and corresponding period of 2012, respectively.
HOPE MOSES-ASHIKE
