The Central Bank of Nigeria has said that the total value of money market assets outstanding in the fourth quarter of 2018 was N11.897trillion.
The CBN, in its economic report for the fourth quarter of 2018 said this showed an increase of 0.4per cent, compared with a 1.4 per cent increase at the end of the third quarter of 2018.
The increase was as a result of the 12.5 per cent and 1.5 per cent increase in bankers’ acceptances and FGN Bonds outstanding, respectively, during the review quarter.
Analysis of the report showed that the money market was generally stable in the fourth quarter of 2018. Liquidity was buoyed by inflow from fiscal injections, Federal Government Bonds, Nigerian treasury bills and maturing CBN bills.
Outflow, such as sale of CBN bills, FGN securities, provisioning and settlement for foreign exchange purchases impacted on market liquidity.
Overall, banks continued to access the intra-day and standing facilities window to meet their short-term liquidity needs during the review quarter.
Consequently, currency-in-circulation (outside of bank vaults) at the end of the same period stood at N2.329trillion, representing a N219.581billion, or 10.45 per cent rise in the festive month of December, when compared to N2.1trillion in the corresponding period of November.
This, however, represented a rise of N162.481billion, or 7.53per cent, year-on-year, from the N2.157trillion reported in December 2017, lower than N203.973billion, or 10.76 per cent rise, from N1.896trillion in November 2017, a further review of the CBN data showed.
The apex bank said the level recorded last December was 20.9 per cent higher, when compared with the growth of 1.4 per cent at the end of September 2018.
Some analysts and political commentators said that the increase was not unexpected in view of the huge political spending ahead of this year’s general elections.
The CBN noted that the rise in currency-in-circulation “relative to the preceding quarter reflected, mainly, the 19.4 per cent and 7.5 per cent increase in currency outside banks and demand deposit components, respectively.”
Already, the increased liquidity has been captured by the nation’s Consumer Price Index published for the month by the National Bureau of Statistics, showing that inflation rate rose by 11.44 per cent in December, from 11.28 per cent in November, following growth across the various divisions.
In January, members of the CBN’s Monetary Policy Committee expressed concerns about the resurgence in inflationary pressure in the economy, noting the position of the NBS that the “increase in headline inflation was driven by food inflation, which rose to 13.36 per cent in December 2018, from 13.3 per cent in November. Core inflation declined marginally to 9.77 per cent in December 2018 from 9.79 per cent in the previous month.”