THIS WEEK: CBN interest rate hike forces bank stocks to nose dive, and more!
The Central Bank of Nigeria raised the benchmark interest rate by 150 basis points to 13% to tackle Nigerian inflation, which reached 16.82% in April 2022 due to rising oil prices. gasoline and foodstuffs.
Following the recent CBN rate hike, the value of 10 Nigerian bank stocks fell at the close of trading as investors’ appetite for fixed income assets increased.
These and many more happened during the week. Here is a compilation of notable events in the Nigerian macro space, markets, regulators as well as other global economies
Naira has lost 70% of its value since Godwin Emefiele became CBN Governor
- Since Central Bank Governor, Godwin Emefiele took office in March 2014 to date, the official Naira rate against the US Dollar has depreciated from N164 to N419 (or 61% lower)
- In the parallel market, the situation is even worse, where the Naira weakened from $1/N180 to $1/605. This is a 70.5% depreciation of the Naira in 8 years.
- This rapid depreciation over an 8-year period occurred despite the CBN’s numerous foreign exchange policies, although the policies were skewed in favor of capital controls and demand management.
MPC: CBN silent on cryptocurrency despite SEC regulation of digital assets
- The Central Bank of Nigeria has remained silent on cryptocurrency despite the Securities and Exchange Commission of Nigeria issuing cryptocurrency regulations.
- The CBN’s silence at the Monetary Policy Meeting (MPC) on the subject means that cryptocurrency remains a prohibited transaction for banks, with sanctions imposed by the apex bank.
- Market participants and cryptocurrency enthusiasts anticipating the apex bank’s response to the SEC law were met with deafening silence, indicating that the CBN’s attitude has not changed.
Central Bank of Nigeria raises policy rate to 13%, blames high inflation
- The Central Bank of Nigeria’s Monetary Policy Committee voted unanimously to raise the benchmark interest rate to 13% after two years of expansionary monetary policy.
- This was revealed by CBN Governor Godwin Emefiele while reading the communiqué of the third monetary policy committee meeting of the year on Tuesday, May 24, 2022.
- The rate which had been at 11.5% since September 2020, in an effort to stimulate recovery from the recession recorded due to covid-19, has now been raised by the apex bank after the inflation rate exceeded 16% .
May 2022 CBN treasury bill auction sees 47% oversubscription after bank hikes interest rates
- One-year Central Bank of Nigeria (CBN) Treasury Bills worth N143.88 billion, which were auctioned on Wednesday, May 25, 2022, have racked up full subscription of 210.82 billion naira, or 147% of the planned capital. raise.
- According to the outcome of the auction, the stop rate for 364-day Treasury bills was 6.49%, which is higher than the marginal rate of 4.7% recorded in the previous auction.
- The apex bank recorded a total subscription of N236.97 billion for the three tranches of treasury bills auctioned against the planned bid of N153.03 billion. This represents a subscription rate of 155%, while the final aggregate allocation was N173.48 billion.
The CBN has set the criteria for registration of other financial institutions in the credit risk management system
- The Central Bank of Nigeria has stated that Other Financial Institutions (OFIs) must meet certain requirements set by the apex bank to be registered with the Credit Risk Management System (CRMS).
- This was revealed by Mr. Chibuzo Efobi, Director of the Department of Financial Policy and Regulation in a circular posted on the CBN website on Tuesday titled: “Re: Registration of Other Financial Institutions (OFI) in the system of credit risk management (CRMS)”.
- The apex bank has reminded all OFIs to ensure that their clients’ accounts follow the 10-digit format of the Uniform Bank Account Number of Nigeria (NUBAN).
Tsunami: Bank stocks fall amid rising interest rates
- Following the recent rate hike by the Central Bank of Nigeria, 10 Nigerian Bank shares depreciated at the close of trading as investors’ appetite for fixed income widens.
- With the MPR rising 150 basis points to 13%, analysts believe the prognosis for the Nigerian stock market will be lukewarm with sideways movement inequalities, on a bearish bias outlook.
- Nairametrics surveys showed that the 10 banks lost around N96.325 billion in one day.
Uniswap hits $1 trillion in trading volume
- Uniswap, the largest decentralized exchange (DEX) in the world with a market capitalization of $4 billion at the time of writing, has now processed a total trading volume of $1 trillion since its launch on Ethereum at the end of 2018.
- Although this comes from a relatively small user base, however, it indicates that there is a lot of growth potential ahead. According to data from Uniswap Labs, which are major contributors to the development of the protocol and the ecosystem, the number of cumulative DEX addresses reached around 3.9 million this month after just over three years.
JPMorgan: Cryptocurrencies are now a “preferred alternative asset”
- Banking giant JPMorgan with assets under management (AUM) of $3.11 trillion, maintained its February 2022 position, this flagship cryptocurrency asset, Bitcoin, is fairly priced at $38,000, which , under current market conditions, is 28% above its current level of around $29,500, according to a note the bank issued to clients on Wednesday.
- The note, written by banking strategist Nikolaos Panigirtzoglou, who was the lead author of this document, stated: “Last month’s crypto market correction looks more like a capitulation compared to last January/February and going forward, we see an upside for Bitcoin and crypto markets more generally.”
Terra 2.0 gets community approval
- “Terra 2.0”, a so-called revival plan for the Terra blockchain ecosystem, has been approved with plans moving forward, after the conclusion of Wednesday’s vote among network validators, which recorded a rate 65% approval. A “snapshot” of the Terra blockchain is expected to take place this week ahead of launch.
- This comes after a banking run on the Terra blockchain, which saw $50 billion in market cap soar between Terra’s native token, LUNA, and its programmable stablecoin, terraUSD (UST), earlier this month. of Terra 2.0.
- A snapshot is a record of the state of a blockchain at a specific time. This will allow Terra to send the newly issued LUNA tokens to holders of the old LUNA. This would, in theory, allow former holders to recover some of their lost investment value while encouraging the use of the new blockchain.