Money Market Rate Decreased As OVN and OBB Fell To 5.29% and 4.57%

Monday, May 20, 2019  / 01:42PM / By
Anchoria AM Research

 

Money Market

The
money market rate decreased last week as the Overnight rate (OVN) and Open Buy
Back (OBB) fell to 5.29% and 4.57% from 10.00% and 9.14% respectively.
Consequently, the average money market rate decreased by 4.64% to settle at
4.93% due to the absence of CBN liquidity mopping activity (OMO) last week. The
System Liquidity is estimated to have increased to close at cN290bn. Major
Inflow for the week included: OMO Maturity of cN117bn, DANGCEM and FSDH
Commercial Paper Maturity of cN45bn while major outflow for the week included:
Weekly Wholesale, Invisible and SME FX auction of $210mn.

 

We
expect the rate to trend upward this week as CBN is expected to renew its
mopping activity and as Bond auction is expected to hold during the week.





Instrument

10/05/2019

17/05/2019

Change

OBB

9.14%

4.57%

-4.57%

OVN

10.00%

5.29%

-4.71%

Source:
Anchoria AM Research, FMDQ OTC

 

Forex: USD/NGN

The
CBN Official rate rose marginally by 0.02% last week to close at N306.95/$
while the rate in the Investors and Exporters’ FX Window fell slightly down by
0.11% to close at N360.50/$ despite an increase of 48% in average market
turnover to close at $1.44 billion during the week. However, Naira at the
parallel market remained unchanged to close at N361.00/$ (using the Everdon BDC
Rate).

 

We expect rates in the parallel market to remain constant as the apex
bank continues to supply FX into the market, coupled with its frequent
Wholesale and Retail SMIS programme.






10/05/2019

17/05/2019

Change

CBN Official Rate

307.00

306.95

-0.02%

I&E FX Window

360.88

360.50

-0.11%

Everdon BDC Rate

361.00

361.00

+0.00%

Source:
Anchoria AM Research, FMDQ OTC

 

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Commodities

Brent Crude Oil and WTI Crude Oil rose by 2.25% and 1.78% to close at
$72.21 and $62.76 per barrel respectively even as geopolitical tensions between
the United States and Iran continues.

Also, according to Reuters, Saudi Arabian Energy Minister Khalid
al-Falih said there was consensus among the Organization of the Petroleum
Exporting Countries (OPEC) and other oil producers to reduce crude inventories
slowly.

 

Fixed Income

Bond:
FGN

The
Bond Market closed on a bullish note last week as average yields fell by 11bps
to close the week at 13.95% due to continuous reduction seen on short term
securities (T-bills) during the week. Yield fell across most maturities,
notable includes 2020 (-54bps) and 2021 (-44bps). The following activities are
expected to shape market activities during the week:

·        
Decision
at the CBN Bi-monthly Monetary Policy Committee Meeting is set to hold between
Monday and Tuesday, 20 – 21 May 2019.

·        
Q1 2019
GDP Report

·        
Bond
Auction, which is expected to hold on Wednesday, 22 May 2019

 

We
expect market participants to remain cautious in the early part of the week.

Secondary
Market

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Source:
Anchoria AM Research, FMDQ OTC

 

Treasury
Bills

Due
to relatively buoyant liquidity coupled with an absence of OMO auction,
secondary treasury bills market closed on a bullish note last week. Average
yield fell by 78bps to close at 12.14% from 12.14% in previous week.

 

Secondary
Market

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Source:
Anchoria AM Research, FMDQ OTC

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Anchoria Research: +234
908 720 6076;  [email protected]

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