The Central Bank of Nigeria (CBN) has reported a significant inflow of over $1.5 billion into the economy, signaling positive outcomes resulting from its monetary policy initiatives.
Mrs. Sidi Ali, the acting Director of the Corporate Communications Department at the CBN, conveyed this information in a statement released on Friday.
Ali highlighted that the inflow was a direct result of the CBN’s efforts to stabilize the foreign exchange market, which has subsequently led to gains for the Naira. She noted that the Naira has appreciated notably, with the exchange rate in the Autonomous Foreign Exchange market improving from N1,611/$1 in the second week of March 2024 to N1,309/$1.
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The recent success in stabilizing the foreign exchange market follows the CBN’s decision to increase the interest rate during its 294th Monetary Policy Committee meeting. The interest rate was raised by 200 points to 24.75%, with Governor Olayemi Cardoso reaffirming the apex bank’s commitment to clearing all verified foreign exchange backlogs. This move is expected to enhance liquidity in the forex market.
Furthermore, the CBN conducted a Nigerian Treasury Bills auction of N1.64 trillion on Wednesday, resulting in stop rates of 16.24%, 17%, and 21.124% for the 91-day, 182-day, and 364-day tenors, respectively.
Despite concerns raised by citizens and economic experts regarding the interest rate hike, Governor Cardoso said that the decision was aimed at stabilizing the economy by aligning the interest rate with current inflation levels.
Governor Cardoso emphasized that while the increase in interest rates may have short-term impacts on the economy, the recent appreciation of the Naira indicates a positive trajectory. He reiterated the importance of collaboration between monetary and fiscal authorities in achieving sustainable economic stability.
In a separate development, Access Holdings Plc has announced plans to establish a capital-raising program of up to $1.5 billion. The organization intends to raise up to N365 billion through a rights issue of ordinary shares, with the proceeds slated to support ongoing working capital needs and organic growth funding for its banking and non-banking subsidiaries.
The capital-raising program aims to enhance Access Holdings’ financial strength through the issuance of various financial instruments, including ordinary shares, preference shares, and alternative Tier-one capital. The corporation has indicated that the specifics of the program, including tranches, series, pricing, and terms, will be determined by the board of directors, subject to regulatory approvals.
“The programme aims to enhance the Group’s financial strength through the issuance of various financial instruments such as ordinary shares and preference shares.
“Also, alternative Tier-one capital, convertible and/or non-convertible debt, bonds, or other capital and/or funding instruments. The programme may be executed through a variety of methods, including public offerings, private placements, rights issues, book-building processes, or a combination thereof,” the corporation said in a statement.
This move follows CBN’s directive to banks to recapitalize. For tier 1 banks like Access Bank, the central bank requires N500 billion, while tier 2 and regional banks are mandated to pay N200 billion and N50 billion respectively.
Many of the banks are expected to merge, issue bonds, or initiate public offerings to survive the new recapitalization directive.