Yields on Treasury Bills remained low on a bullish performance with average rates across benchmark tenors trended lower, as traders say they expect maturities from Open Market Operation to further drive down rates.
The TBills market bullish momentum continued on the back of CBN’s restriction with average rates down 57 basis points, week on week to close at 7.2 per cent, with the 364-day bill enjoying the most buying interest as rate declined 100bps to 7.5 per cent. Rates on the 91- and 182-day bill declined 40bps and 30bps to 7.4 and 7.3 per cents respectively.
Traders say they envisage that the elevated system liquidity levels would continue to drive rates lower in the secondary T-Bills market as N344.9 billion OMO maturities is expected to hit the system this week.
At the foreign exchange market, the naira remained relatively stable inspite of the declining reserves. The 30-days moving average of the foreign reserves had further depleted to $39.822 billion as at November 28, 2019 compared to $39.929 billion which it was as at November 22, 2019.
The Central Bank of Nigeria (CBN) had continued its interventions at the foreign exchange market, selling $100 million to the Wholesale Segment (SMIS) and $55 million each to both the SMEs and the retail (invisibles) segments. Analysts at Afrinvest West Africa said the prospect for accretion in the reserves remain dim due to low oil prices and Foreign Portfolio Investment (FPI) inflows.
The CBN Spot rate opened the week at N306.95 to the dollar but closed at N307, depreciating by 5kobo, while the naira at the parallel market, it remained flat, to close at N360 to the greenback for the week. At the Investors’ & Exporters’ (I&E) Window, the NAFEX rate opened the week at N362.30 to close at 362.81 appreciating by 17kobo. Activity level in the I&E Window waned as total turnover declined 29.8 per cent to $879.4 million from $1.3 billion recorded the previous week.
At the FMDQ Securities Exchange (SE) FX Futures Contract Market, the total value of open contracts of the Naira settled at $9.7 billion, down $482.1 million from $10.7 billion in the prior week due to the maturity of the NOV 2019 instrument.
NOV 2020 instrument received the most buying interest in the week with additional subscription of $51.2 million which took total value to $89.8 million. On the other hand, the DEC 2019 instrument was the least subscribed, with an additional subscription of $1.5 million for a total value of $1.7 billion.
Interbank rates trended higher despite improved system liquidity given the net OMO inflows of N102.7 billion, liquidity rose to N977.8bn. As a result, OBB and OVN rose by 9bps and 7bps to settle at 3.8 and 4.5 per cents respectively.