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Against projections, CBN raises interest rate to 17.5%

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Naira redesign: Bank operators counter CBN for alleged hoarding of new notes

 Against projections by some experts, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has increased the monetary policy rate by 100 basis points to 17.5 percent.

This is contained in a communiqué issued at the end of the first MPC meeting in 2023, in Abuja on Tuesday.

CBN Governor, Mr. Godwin Emefiele, who read the communiqué said that the previous increases had yielded results, with a slight drop in the inflation rate recorded in December 2022.

The committee, however, held all other parameters constant.

While the Asymmetric Corridor of +100/-700 basis points around the MPR was retained, the Liquidity Ratio of 30 percent and the Cash Reserve Ratio (CRR) of 32.5 percent were also retained.

The MPR had witnessed four consecutive increases, from 11.5 percent in early 2022 to 16.5 in November 2022.

According to Emefiele, the committee deliberated on whether to hike rates further or hold on to examine the impact of the past increases.

“The options considered were primarily to hold the rate or tighten it further to consolidate the previous gains.

“However, the MPC noted that loosening the rate would gravely undermine the gains of the last four increases, hence the hike in rate,” he said.

Some financial experts had projected that the apex bank would most likely retain the previous rates.

According to Umhe Uwaleke, a Professor of Capital Market at the Nasarawa State University, Keffi, increasing the MPR can jeopardise economic growth.

Uwaleke said that the MPC was likely to hold all the existing parameters for two reasons.

“One, historical evidence suggests that the MPC seldom adjusts policy rates in January, due to the need to allow the markets to stabilise in the new year.

“Secondly, inflationary pressure is beginning to reduce as seen in headline inflation numbers for December 2022, not only in Nigeria but also in the United States of America.

“I do not advise a further hike in MPR, as doing so beyond the current high rate of 16.5 percent is capable of jeopardising economic growth,” he said.

An economist, Dr. Tope Fasua, urged the CBN to shun the temptation to further increase the rates.

Fasua suggested that the rates should be retained and be guided by market trends, adding that constantly increasing interest rates could spur recession.

” I hope they hold the rate as it is and watch what happens.

“Already, inflation trended down 0.14 percent; they may be tempted to further increase rates to accelerate the fall.

“But, they need to now think about the fact that constant raising of interest rates could spur recession, as life becomes harder for manufacturers,” he said. 

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Banking & Finance

NGX Maintains Upward trend by N142bn; Guinness Nigeria, Ardova lead Losers’ Chart

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NGX Maintains Upward trend by N142bn; Guinness Nigeria, Ardova lead Losers’ Chart

The Nigeria Exchange Ltd. (NGX) on Wednesday gained N142 billion or 0.49 percent as market capitalisation went up to N29.139 trillion from N28.997 trillion on Tuesday.

Also, the All-Share Index (ASI) rose by 261.01 points or 0.49 percent to 53,499.68 points from the 53,238.67 recorded on Tuesday.

Consequently, the Year-to-Date (YTD) return rose to 4.39 percent

The positive performance was impacted by gains recorded in medium and large capitalised stocks, amongst which are: NAHCO, NNFM, Nigerian Exchange Group, IMG and Geregu.

Market breadth closed flat as 14 stocks recorded gains relative to 14 losers.

Seplat and Industrial & Medical Glasses (IMG) recorded the highest gain of 10 percent each to close at N1,210 and N7.70, respectively.

Northern Nigeria Flour Mills followed by 9.46 percent to close at N8.10 per share.

International Energy Insurance rise with a gain of 9.33 percent to close at 82k, while Nigerian Aviation Handling Company garnered 9.26 per cent to close at 37k per share.

On the other hand, Guinness Nigeria led the losers’ chart by 10 percent, to close at N63 per share.

Ardova followed with a decline of 9.95 percent to close at N17.20 per share.

Also, Academy Press dropped by 9.85 percent to close at N1.19, while RT Briscoe declined by 9.68 percent to close at 28k per share.

Cornerstone Insurance declined by 8.33 percent to close at 55k per share.

However, the total volume traded increased by 30 percent to 200.37 million shares, worth N5.52 billion, and traded in 3,716 deals.

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Banking & Finance

NGX: Market Capitalisation up by N44bn, NCR Nigeria, Chams top losers’ chart

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NGX Maintains Upward trend by N142bn; Guinness Nigeria, Ardova lead Losers’ Chart

The market capitalisation on Tuesday was up by N44 billion or 0.15 percent to close at N28.997 trillion from N28.953 trillion reported on Monday.

In the same vein, the All-Share Index appreciated by 80.84 points or 0.15 percent to close at 53,238.67 from 53,157.83 recorded on Monday.

Veritas Kapital, LivingTrust Mortgage Bank and Geregu Power led the gainers’ table in percentage terms, gaining 10 percent each to close at 22k, N1.98 and N193.60, per share, respectively.

John Holt Plc followed with 9.92 percent to close at N1.33, while SCOA gained 9.78 percent to close at N1.01 per share.

Conversely, NCR Nigeria and Chams topped the losers’ chart in percentage terms, dropping by 10 percent each to N3.24 and 27k per share, respectively.

Unity Bank trailed with loss of 9.09 percent to close at N50, while Royal Exchange dipped 8.97 percent to close at 71k per share.

Japaul Gold & Ventures was down by 8.33 percent to close at 33k per share.

 The NGX  however moved a total of 250.19 million shares worth N5.88 billion in 4,328 deals.

This was against a turnover of 201.36 million shares valued at N5.67 billion exchanged in 4,332 deals on Monday, a decrease of 3.7 percent.

Universal Insurance Company was the most active stock during the day, exchanging 48.55 million shares valued at N9.71 million.

Guaranty Trust Holding Company (GTCO) followed with an account of 14.16 million shares valued at N353.77 million, while Zenith Bank traded 12.52 million shares worth N315.02 million.

Access Bank Holdings sold 11.57 million shares valued at N104.88 million, while Unity Bank traded 10.88 million shares worth N5.48 million.

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Banking & Finance

Equity Market Gains N272bn, as Wapic Assurance, Tripple Gee lead Losers’ Table

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Equity Market Gains N272bn, as Wapic Assurance, Tripple Gee lead Losers’ Table

The nation’s bourse rebounded on Monday with market capitalisation gaining N272 billion or 0.95 percent to close at N28.953 trillion as against N28.681 trillion recorded on Friday.

Also, the All-Share Index (ASI) gained 499.95 points or 0.95 percent to settle at 53,157.83 as against 52,657.88 recorded on Friday.

The positive performance was driven by stocks of Zenith Bank, Airtel Africa and Wapco.

As a result, the year-to-date (YTD) return declined to 3.72 percent.

Market breadth closed positive as 28 stocks advanced, while 15 others declined.

A breakdown of price movement showed that John Holt and Geregu Power topped the gainers’ table with a gain of 10 percent each to close at N1.21 and N176 per share, respectively.

Nigerian Aviation Handling Company trailed with a gain of 9.62 percent to close at N8.55, while International Energy Insurance rose by 9.52 percent to close at 69k per share.

Mayer& Baker Nigeria was up by 8.26 percent to close at N4.85 per share.

Conversely, Wapic Assurance led the losers’ table, dropping by 8.89 percent to close at 41k per share.

Tripple Gee followed with a loss of 8.57 percent to close at 96k per share.

Royal Exchange decreased by 7.14 percent to close at 78k, while  Honeywell Flour Mills fell by 6.44 percent to close at N2.18 per share.

UPDC dropped by 5.94 percent to close at 95k per share.

Analysis of the market activities showed trade turnover settled higher relative to the previous session, with the value of transactions up by 141.78 percent.

A total of 201.36 million shares valued at N5.67 billion were exchanged in 4,332 deals.

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