CBN reduces money in circulation over inflation

CBN

The Central Bank of Nigeria (CBN) has reduced the money in
circulation due to the current inflation.Last week, the revenue shared
among the three tiers of government could not boost the quantity of
money in circulation, because the financial system regulators had sold
debt instruments to mop up the cash.
The apex bank used the Open Market Operations to
withdraw N8.3
billion, while the short-dated treasury bill’s issuance attracted N177
billion. Besides, the week also coincided with the period of Cash
Reserve Ratio deductions.
Meanwhile, the attractive interest rate’s offer for investors and
government guarantee have become the allure for huge investor-turnout,
which are mostly patronized by banks.
The implications are that rather than lend to the real sector
operators, banks would stake more for fixed income securities, which are
risk-free because they are guaranteed by government.
“Against our expectation, secondary market instruments witnessed
significant interest as investors channeled the demand from the primary
segment which could not be fulfilled, while leveraging on attractive
yield in the secondary market,” analysts at Afrinvest Securities Limited
said.
The Executive Director at BGL Capital Limited, Femi Ademola, said
there is no money in the economy like it used to be and this has lasted
for over two years.
The CBN Governor, Godwin Emefiele, had affirmed that states lost an
average of N2 billion monthly in federal allocations due to the sliding
fortunes in crude oil prices, which affected monthly national
distributable.
He listed the shortage of money in the economy as one of the
challenges facing the country, which he described as “a crucial point”
in history, because the economy is in recession.

READ  Nigerian Pastor Shows Off His Expensive Hummer Limousine in Lagos Worth N80 million (Photos)

Leave a Reply

Your email address will not be published. Required fields are marked *