Naira Weakens 0.7% At I&E Fx Window
ISMAIL MUSA
The Nigerian Naira on Monday declined at both the parallel market and the Investment and Export (I&E) Segment respectively.
The naira depreciated by 0.2 percent and 0.7 percent to N387.33/USD and NGN450.00/USD at the I&E window and parallel market, respectively. Last trading week, the Naira also depreciated against the USD by 0.04 percent w/w to NGN386.50/USD at the Investment and Export (I&E) window but closed largely flat at NGN450.00/USD in the parallel market.
In the money and fixed income market on Monday, the overnight lending rate contracted by 128bps to 15.4 percent, in the absence of significant outflows from the system.
Trading in the NTB secondary market was mixed, as the average yield was flat at 3.4 percent. Elsewhere, average yield contracted by 14bps to 5.0 percent in the OMO secondary market.
Trading in the Treasury bond secondary market was mixed, albeit with a bullish tilt, as average yield pared by 4bps to 10.0 percent. Across the benchmark curve, yield contracted at the short (-6bps) and long (-9bps) ends, due to demand for the JAN-2026 (-55bps) and MAR-2050 (-27bps) bonds, respectively, while they expanded at the mid (+2bps) segment due to sell-off of the APR-2029 (+5bps) bond.
It will be recalled that last week, Nigeria’s foreign Exchange (FX) reserves recorded their first decline in a period of four weeks, declining by $17.09 million, to end the week at $36.58billion.
During the week, the Central Bank of Nigeria (CBN) stepped up its currency market intervention, which led to its first reserve depletion in four weeks. The country’s external balance dipped by USD17.09 million WTD to USD36.58 billion of which the trend is expected to be sustained this week, in the absence of inflows from lender institutions.
It is expected that this week, tight system liquidity will prevail and will negatively affect the demand for instruments in the Treasury bond secondary market. Nonetheless, yields are expected to pare, as investors’ “demand should remain focused on this side of the market, given the level of yields in the Treasury bills market” Noted Cordros Research.
Last week, trading in the Treasury bonds secondary market was mixed, albeit with bullish bias, as the average yield contracted by 9bps to 10.0 percent.
Trading was static due to muted activity in the market, as market participants shifted attention to FGN’s Sukuk bond issuance. Across the benchmark curve, yield contracted at the short segment by 15bps and long segment by -3bps as investors demanded JAN-2026 bond (-55bps) and MAR-2050 bond (-10bps), respectively, while they expanded at the mid-segment by 1bp due to sell-offs of the MAR-2027 (+1bp) and FEB-2028 (+1bp) bonds.
Comments are closed.