The naira depreciated marginally against the United States dollar at all the forex market segments last week due to strong demand for the greenback. Specifically, while the nation's currency shed 76 kobo at the interbank market to close at N162.21 to a dollar on Friday, it fell by N2 at the Bureau De Change (BDC) to close at a N172.50 to a dollar. Similarly, at the parallel market, the naira also depreciated by 58 kobo to close at N173 to a dollar. The trend also continued at the Retail Dutch Auction System (RDAS), the official forex market as the local currency also dropped slightly by two kobo to close at N155.74 to a dollar. The Central Bank of Nigeria (CBN) sold a total of $699.96 million to end users at the bi-weekly regulated forex market; out of the $700 million it offered the market. In comparison with other major currencies in the international market, the naira also depreciated against the Pounds and Euro by N4.24 and N1.11 respectively to close at N263.21 and N217.90. "This week, we expect the pressure on the naira to be sustained due to the declining foreign exchange reserves and slowdown in foreign portfolio," analysts at Cowry Asset Management Limited said it a report at the weekend. Interbank Market The Nigerian Interbank Offered Rates (NIBOR) reduced across various tenor last week due to the inflow of funds from matured treasury bills. Treasury bills worth N158.71 billion hit the financial system via the Open Market Operations. This consisted of 87-day bills worth N63.15 billion; 136-day bills worth N22.45 billion; and 182-day bills worth N73.14 billion. In addition, the Federation Accounts Allocation Committee (FAAC) last week shared a total distributable revenue including Value Added Tax (VAT) amounting to N581.498 billion among the three tiers of government for December. Traditionally, FAAC funds which are normally channeled through the banking system always contribute in lowering cost of funds. Thus, data gathered from the FMDQ showed that except for the Overnight tenor that increased slightly, other tenors at the interbank market reduced as a result of the strong liquidity position of the market. For instance, while the Overnight tenor increased to 10.58 per cent on Friday, from 10.54 per cent the preceding Friday, the 7-day tenor closed at 10.83 per cent, from 10.87 per cent the preceding Friday. The 30-day tenor also dropped to 11.08 per cent on Friday, from 11.12 per cent the preceding Friday, while the 60-day tenor reduced to 11.37 per cent, from 11.42 per cent. The 90-day, 180-day and 365-day tenors all closed lower at 11.67 per cent, 12 per cent and 12.35 per cent respectively. However, the FMDQ data showed that the one-month tenor of the Nigerian Interbank Treasury Bills True Yield (NITTY) closed at 10.58 per cent, while the two-month tenor also closed at 11.38 per cent. The three-month, six-month, nine-month and 12-month tenors of the NITTY all closed at 11.58 per cent, 12.55 per cent, 12.97 per cent and 13.51 per cent respectively. This week, the market anticipates improved liquidity as treasury bills worth N310.71 billion would be redeemed on Thursday. The maturating bills would consist of 52-day bills worth N7.3 billion; 55-day bills worth N11.15 billion; 56-day bills worth N23.25 billion; 84-day bills worth N6.5 billion; 90-day bills worth N65.63 billion; 91-day bills worth N32.89 billion; 98-day bills worth N34.01 billion; 182-day bills worth N30 billion and 364-day bills worth N100 billion. "Consequently, we expect interbank rates to decelerate further as combined inflows from maturing treasury bills and FAAC funds valued at N581.5 billion would largely offset outflows," the Cowry Assets report added. Bond Market The Over-the-Counter (OTC) bond market prices declined (while yields increased) for most maturities. The 20-year 10% FGN JUL 2030 bond depreciated by 65 kobo; the 10-year, 16.39% FGN JAN 2022 fixed income instrument fell by 45 kobo; the 7-year, 16% FGN JUN 2019 instrument also lost 40 kobo. However, the 5-year 4% FGN APR 2015 debt climbed by 25 kobo and the 3-year, 13.05% FGN AUG 2016 bond gained 25 kobo. The Debt Management Office last week auctioned FGN bonds worth N90 billion. The instruments (all re-openings) consisted of three-year, 13.05% FGN AUG 2016 debt worth N45 billion and 20-year 10% FGN JUL 2030 worth N45 billion. The marginal rate for both the 3-year and 20-year bonds increased to 13.10 per cent and 13.60 per cent respectively from 12.90 per cent and 13.20 per cent recorded in the previous auction. Oil Revenue Following serious disruptions in crude oil production and lifting operations including vandalism of pipelines, maintenance and the Force Majeure declared at Bonny Terminal , monthly gross oil revenue dropped by N117. 802 billion to N479.950 billion in December compared to N597.752 billion the previous month. Revenue collection from VAT also fell to N64.725 billion in the period under review compared to N91.730 billion in November. The Minister of State for Finance, Alhaji Yerima Ngama said last week mineral revenue of N379.122 billion which was received for the month fell short of the budgeted amount of N465.057 billion while the non-mineral revenue of N100.828 billion also fell short of the budgeted figure of N158.711 billion. The distributable statutory revenue for the month stood at N473.607 billion. A breakdown of the statutory revenue distribution showed that the federal government got N221.161 billion while the states shared N112.176 billion as well as the local governments, which got N86.483 billion. Africa's FDI Inflows The net Foreign Direct Investment (FDI) inflows to African countries grew by 16.2 per cent to $43 billion in 2013, the World Bank revealed last week. According to the World Bank , most of the funds into the country went to the natural resources sector, supporting exploration and production in oil, gas and mining. The report however pointed out that FDI flows to the non-resource sector also increased, citing the service sector, where it noted that rising consumer incomes buoyed activities in telecommunication, finance, retail and transportation. Furthermore, the Washington -based lender, stated in the report that consumer-oriented FDI projects in manufacturing and services expanded rapidly in recent years. "As a result, their share in the total value of FDI Greenfield projects in the region has risen from about seven per cent in 2008, to 23 per cent in 2012," it added. According to the World Bank , Sub-saharan Africa's real Gross Domestic Product (GDP) growth picked up to 4.7 per cent in 2013. This, it said was supported by robust domestic demand, notably investment growth. Nevertheless, the report showed that excluding South Africa , GDP growth for the rest of the region averaged six per cent in 2013, adding that about a third of African countries grew by six per cent or more in 2013. IT Guidelines for Banks In order to ensure that banks adopt global Information Technology (IT), the CBN last week introduced a new framework for the industry. The central bank said the new document would provide guidelines for and serve as reference points in ensuring the quality of IT service delivery in the Nigerian banking industry. The circular explained that a five-year implementation roadmap for the IT standards within which banks were expected to implement in accordance with the set timelines and the defined priorities had also been identified. Furthermore, it stated that implementation would be in a continuum approach such that initial implementations would target "maturity level three and subsequently improved to include certification and higher maturity levels."
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