The Central Bank of Nigeria (CBN) has used the instrument of Open Market Operations to withdraw N8.3 billion, while the short-dated Treasury bill’s issuance attracted N177 billion, thus signaling massive reduction of cash in circulation, Business Hilights can authoritatively report.
Another coincidental strategy to also squeeze cash in the economy was the ongoing period of Cash Reserve Ratio deductions.
Checks in some big markets in Lagos suggest that there may be a slight drop in inflation rate by year end, which experts say may trip on gradual recover from the recession. But experts say, the combined policy efforts will work better if local contractors are paid within the period so as to jerk up activities in the real sector.
Another plan that may crown the efforts of the apex bank in taming inflation could be the attractive interest rates offer for investors and government guarantee which currently serve as a strong bait for deep pocket investor-turnout, now growing applications and requests for loans in some banks.
Pundits now posit that 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.
Analysts at Afrinvest Securities Limited said “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”.
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.
More credence was given to Ademola’s position as 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.
