Central Bank of Nigeria (CBN) spent N577.46 billion to stem the tide of spiralling inflation in the first six months of 2017.
Also, the apex bank spent another $7.6 billion to reign in free falling naira, which exchanged for over N500 per one American dollar early the year under review.
It equally came to light that it cost Federal Government N687.3 billion to service its N11.8 trillion domestic debts during the period.
In its first half 2017 Financial Markets Department (FMD) report, the bank noted that “the cost of liquidity management amounted to N577.46 billion compared to N122.99 billion in the corresponding period of 2016.
From a high of 18.72 percent in January 2017, inflation fell to 17.78 in February and ended the first half of the year at 16.1 percent.
“The increased transactions during the review period were attributable to the greater monetary tightening stance that resulted in increased number of auctions.
“In addition, CBN Bills maturities and the monthly disbursements to the three tiers of government by the Federation Account Allocation Committee (FAAC) contrib
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CBN Bills that were offered amounted to N3,702.96 billion, while total public subscription and sale amounted to N4,593.93 billion and N3,871.27 billion, respectively.
This compared with N1,922.45 billion, N3,869.94 billion and N2,329.75 billion offered, subscribed to and sold respectively, in the corresponding period of 2016.
The tenors of open market operations (OMO) auction ranged from 140 to 364 days, while the stop rates were between 16.00 to 18.60 per cent.
In the preceding year, the tenors ranged between 143 and 364 days, while the stop rates were between 7.70 and 13.50 per cent.
And in line with the subsisting foreign exchange management mechanism, CBN continued to intervene at the interbank segment of the market with total sales amounting to US$7,642.61 million.
Details of the intervention show that the bank deployed US$747.89 million to the spot market, US$704.86 million for Invisibles, US$441.00 million for small and medium enterprises (SMEs) and US$5,748.86 million at the forwards market.
“On the other hand, the CBN purchased a total of US$1,013.75 million at the interbank market. Consequently, net sales by the Bank amounted to US$6,628.86 million; while the sum of US$5,332.66 million matured at the forward segment of the market, and US$1,988.67 million remained outstanding at end-June 2017.”
Sales by the CBN in the first half of 2017 were lower, when compared to first half of 2016, when it sold a total of US$9,215.62 million, made up of US$5,727.86 million spots and US$3,487.76 million at the forwards market.
The report traced the reduction to the policy adjustments that encouraged larger autonomous inflows into the market.
The FMD report put the cost of domestic debt instruments of Federal Government during the first half of 2017 at N687.37 representing an increase of 11.34 per cent when compared to N617.36 billion at end-June 2016.
“The increase in the cost of debt servicing was attributable to the increased stock of the domestic debt instruments, from N10,606.33 billion at end-June 2016, to N11,860.77 billion at end-June 2017, which included the newly introduced FGN Savings Bonds.
“A breakdown of the cost showed that FGN Bonds coupon payments accounted for N473.19 billion or 68.84 per cent, while interest on NTBs stood at N201.57 billion or 29.33 per cent, FRN Treasury Bonds, N12.54 billion or 1.82 per cent and FGN Savings Bonds contributed the balance of N0.07 billion or 0.01 per cent.”
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