Banking sector credit to the private sector increased year-on-year by 2.5 per cent or N12 billion to N18.719 trillion at the end of December 2015, compared with the N18.707 trillion it stood at the end of November 2015.
This was revealed by data compiled from the Central Bank of Nigeria’s (CBN) money and credit statistics for December 2015, released recently.
The central bank data also revealed that broad money (M2), which generally is made up of demand deposits at commercial banks and monies held in easily accessible accounts climbed year-on-year from N18.367 trillion as at November, to N20.030 trillion at the end of December.
Similarly, narrow money (M1), which includes all physical monies such as coins and currency along with demand deposits and other assets held by the central bank edged higher year-on-year to N8.571 trillion in the review month, as against the N6.980 trillion recorded the previous month.
Also, currency outside banks rose from N1.261 trillion in November, to N1.456 trillion as at the end of December.
In the same vein, currency-in-circulation increased to N1.858 trillion at the end of December, compared to the N1.633 trillion it was the previous month.
The central bank data showed that the total amount of banks’ reserves with the central bank fell from N4.006 trillion the previous month, to N3.955 trillion.
But demand deposits, which are funds held in an account from which deposited funds can be withdrawn at any time without any advance notice to the depository institution increased from N5.053 trillion in November, to N7.116 trillion in the month under review.
Also, quasi money, which is made up of highly liquid assets that can easily be converted to cash increased slightly to N11.458 trillion in December, from N11.387 trillion the previous month, just as Net Foreign Assets rose to N5.653 trillion, from to N5.287 trillion.
But considering developments in the macroeconomy, analysts at Afrinvest West Afric Limited have stressed the need for the monetary authority to step in to stem what they described as the rent-seeking activities going on in the parallel market.
“Going forward, the challenge of greater import costs on businesses is expected to further impact both the core and food inflation rates as cost push factors weaken operating margins amid demand pressure in the forex market,” they added.
The National Bureau of Statistics (NBS) released the January 2016 Consumer Price Index (CPI) report, which indicated that CPI stayed flat at 9.6 per cent year-on-year.
The volatility in the foreign exchange market at the BDC and parallel market segments were at unparalleled levels last week as the US$/Naira exchange rate depreciated to unprecedented record lows, triggered by both fundamental supply gap of forex in the economy and speculations of further tightening of exchange rate rules.
The official (CBN) and interbank rates were stable all week at N197.00/$1 and N199.10/$1 respectively.
However, forex rose astronomically all week at the BDC and parallel segments of the market, with rates trading at N337/$ at the start of the week, rising to N365/$ by Thursday at the BDC and record high N400/$ at the parallel market.
Owing to the stance of the CBN and fiscal authorities on foreign exchange adjustments, the increase in speculative activities at the less-regulated segments of the market and widening spread between the official and parallel market rates may not likely generate any reaction from regulators in the short term.
Source: ThisDay
