CBN Opens Discount Window To Boost Liquidity

In a move to avert a liquidity crisis in the interbank FX market, the Central Bank of Nigeria (CBN) wednesday opened a discount window for banks to meet their short-term dollar demands, THISDAY learnt last night.

Although attempts to confirm this from the CBN proved abortive, it was gathered the move was to help stabilise activities in the interbank FX market.

Speaking in a phone interview with THISDAY, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said the decision to create a discount window would be positive for the market.

“You know they (CBN) have taken out so much funds in the past three days and lack of liquidity will not allow it to effectively achieve its objective in the market,” he explained.
The overnight tenor of the Nigeria Interbank Offered Rate (NIBOR) responded to the supply gap in the market yesterday, as it jumped to 68.50 per cent, higher than the 51 per cent on Tuesday. Also, the open buy back (OBB) rate climbed to 63.33 per cent yesterday, higher than 45 per cent on Tuesday.
But the naira appreciated by N2.03 to close at N282.80 to a dollar on the third day of trading on the interbank spot market yesterday, 0.71 per cent lower than N284.83 to a dollar on Tuesday.

Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane