… Commercial papers will increase the credit flow to the economy – Anal


FSDH Research analysts said that the recent announcement by the Central Bank of the Nigerian Governor at the end of the last meeting of the Monetary Policy Committee (MPC) encourages large corporations to issue Commercial Paper (CP), which can be purchased by the top bank, if necessary, and to increase the creation credit and business expansion.

The head of the research, Ayodela Akinunmi, reported this at a monthly meeting with journalists in Lagos yesterday.

Akinyunmi said, while FSDH Research believes that these measures can increase credit creation and business expansion to stimulate growth, additional fiscal measures are needed to reduce the risk of economic development.

At the end of its meeting in July 2018, the MPC supported the monetary policy rate (MPR) at 14%, and the asymmetric corridor – at +200 and -500 basis points around the MPR. He maintained the ratio of cash reserves (CRR) and liquidity ratio (LR) at 22.50% and 30%, respectively. However, he intends to introduce non-traditional strategies to stimulate the creation of credit and economic growth.

The FSDH study believes that this measure will lead to an increase in the release of CP in Nigeria in HY2, 2018. The yield of CP may also decline or achieve yield in the Nigerian Treasury Bills (NTBs).

"This measure will reduce financial costs for large corporations and increase their profitability. Similarly, CBN plans to implement measures to raise funds for the reserve fund (CRR) in the manufacturing and agricultural sectors of the Nigerian economy at an interest rate of 9% with a minimum maturity of 7 years and a moratorium over 2 years, "he added.

Meanwhile, CBN data show that net domestic credit decreased insignificantly by 0.57% to N25.72 trillion in May 2018 from N25.86 trillion in December 2017. Net credit to the private sector slightly decreased by 0.37% to N22.21 trillion over the same period.

For impairment in the stock market in July 2018, after the assessment noted in June, FSDH Research believes that the stock market is approaching the oversold position. Perhaps, there will be a change in the downward trend, as economic fundamentals contribute to the recovery in the stock market.

In June, the index of all shares of the Nigerian Stock Exchange (NSE ASI) depreciated by 3.29% (a loss of 3.34% in US dollars) and amounted to 37.017.78 points. Year on year (from the beginning of the year), the index recorded depreciation of 3.20%.

Similarly, market capitalization recorded a M-o-M loss of 3.29% (a loss of 3.34% in US dollars) to the level of N13.41 t ($ 43.84 billion).



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