Naira Drops To N386.50 At I&E FX Window
The Nigerian Naira on Monday weakened at the Investment and Export (I&E) window by 0.1 per cent to NGN386.50/USD while it closed was flat at the parallel market at NGN461.00/USD.
In the money and fixed income market, the overnight lending rate contracted by 250bps to 21.0 per cent, amid the still thin system liquidity.
Activities in the Nigerian Treasury Bill (NTB) secondary market were mixed, as average yield pared by 1bp to 2.1per cent per cent.
Across the curve, yields expanded slightly at the short (+1bp) end, following sell-off of the 87DTM (+5bps) instrument, while they contracted at the long (-4bps) end, due to demand for the 220DTM (-15bps) instrument; yield at the mid segment was flat. Elsewhere, average yield expanded by 3bps to 5.2% at the OMO secondary market.
Trading in the Treasury bond secondary market was bullish, as average yield contracted by 4bps to 8.0 per cent.
Across the curve, yield contracted at the short (-9bps) and mid (-1bp) segments, driven by demand for the JAN-2022 (-31bps), and APR-2029 (-1bp) bonds, respectively; yield at the long end was flat.
The overnight (OVN) rate jumped by 740bps w/w, to 23.5% as outflows from CRR and OMO auction (NGN100.00 billion) debits outweighed the inflows from OMO maturities (NGN333.31 billion) and retail FX refunds.
Meanwhile, analysts had predicted that the new week is likely to see a modest contraction in the OVN, with system liquidity receiving a slight boost from OMO maturities (NGN16.00 billion).
It will be recalled that last week, in the Treasury bills secondary market, trading remained at moderate levels following pressured system liquidity, low rates and shift in focus to the primary markets of both segments.
Nonetheless, the average yield across all instruments pared by 2bps to 4.2 per cent. Across the segments, average yield expanded by 14bps to 5.2 per cent at the OMO segment as activity in the space remained frail; yields contracted by 15bps to 2.1 per cent, on average, at the NTB segment, as market participants covered for lost bids at the PMA.
At the PMA, demand remained heavy, as there was an oversubscription of 3.7x for the NGN88.86 billion worth of bills on offer. The auction closed with the CBN rolling over NGN10.00 billion of the 91-day, NGN20.00 billion of the 182-day and NGN58.86 billion of the 364-day – at respective stop rates of 1.79% (previously 1.80%), 1.91% (previously 2.04%), and 3.39% (previously 3.75%).
At the OMO auction last week, stop rates were unchanged as the CBN mopped up NGN100.00 billion of maturating bills across all tenors.
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