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HomeTop NewsCBN slashes CRR for Merchant Banks to 10% as equities market rises,...

CBN slashes CRR for Merchant Banks to 10% as equities market rises, naira gains

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By Samuel Bankole

The Central Bank of Nigeria (CBN) announced on Monday a significant reduction in the cash reserve requirement (CRR) for merchant banks, lowering it to 10 percent from the previous 32.50 percent.

The new requirement will be effective from August 1, 2023. This decision by the CBN comes as the Nigerian naira strengthened against the U.S. dollar at the Investors and Exporters (I&E) forex window.

The nation’s equities market experienced a positive rally, with a growth of 0.60 percent driven by banking stocks. The main market index, the All Share Index, rose by 0.60 percent to close at 62,943.35 points. Consequently, the market capitalization of equities listed on the Nigerian Exchange (NGX) increased to N34.273 trillion compared to N34.070 trillion recorded in the previous session.

Trading activity recorded a total volume of 710.018 million units, valued at N13.83 billion, exchanged in 8,979 deals. The market breadth remained positive, with 42 gainers outnumbering 28 losers. The NGX 30 Index closed at 2,292.44 points, reflecting a 0.63 percent increase from the previous close. Market turnover amounted to 357.25 million units.

Key gainers in the equities market included Fidelity Bank and Unilever, both registering a maximum 10 percent increase. Sterling Bank rose by 9.97 percent, Ecobank gained 9.84 percent, and First Bank holding company, FBNH, rose by 9.81 percent.

On the other hand, UBN and Nigerian Breweries were among the key losers.

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Union Bank top the laggard chart with maximum of 10 percent loss followed by Nigerian Breweries with 5.13 percent decline.

Nascon shares fell 3.74 percent, Dangote Sugar weakened by 3.10 percent while Flour Mills of Nigeria Fell 1.96 percent at the end of trading on Monday.

In foreign exchange trading, the Nigerian naira appreciated against the U.S. dollar, with the exchange rate quoted at N795.28 compared to the previous close of N803.90 at the I&E forex window.

On the parallel market, the naira exchanged at N825 to the greenback compared with N812 to the dollar on Friday.

In the interbank market, the Overnight (O/N) rate decreased to 1.42 percent from the previous close of 1.59 percent, marking a decline of 0.17 percent.

Similarly, the Open Repo (OPR) rate decreased to 1.04 percent, compared to 1.11 percent on the previous day, indicating a 0.07 percent decline.

The CBN’s decision to reduce the cash reserve requirement for merchant banks is expected to enhance their ability to provide increased infrastructure, support the real sector, and facilitate long-term financing to foster the development of the Nigerian economy.

(omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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