CBN intervenes with $269.92m, CNY31.34m in retail SMIS, mop-up N808.96bn

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CBN

In continuation of its periodic intervention in the inter-bank segment of the foreign exchange market, the Central Bank of Nigeria (CBN) on Friday, March 8, 2019, injected the sums of $269.92 million and CNY 31.34 million in the Retail Secondary Market Intervention Sales (SMIS) of the Foreign Exchange market.

The dollar interventions were for customers in the agriculture, airlines, petroleum products and raw materials and machinery sectors, while the CNY 31.34 million component was for payment of Renminbi-denominated Letters of Credit for agriculture as well as raw materials .

Confirming the figures, the Bank’s Director, Corporate Communications Department, Mr. Isaac Okoroafor said the level of stability in the market was commendable and would be sustained by the Bank.

Friday’s transaction was in addition to the $210 million injected into the Wholesale, Small and Medium Enterprises, and Invisibles segments of the market on Tuesday, March 5, 2019.

Meanwhile, the exchange rates closed at the rate of N357/$1 on Friday, March 8, 2019 in the Bureau De Change segment of the market, while the Chinese Yuan, closed at N47/CNY1.

The apex bank last week increased the spate of its Open Market Operation (OMO) auctions in order to mop-up the excess liquidity, selling a total of N808.96 billion over four auctions.

Overnight lending rate moderated by 733 basis w/w to close at 10.08per cent, amid inflows from matured OMO bills (N228.95 billion);  FAAC disbursements to state and local governments (c. NGN340 billion); Paris Club refunds (undisclosed), and  Investors &Exporters window foreign exchange purchases by the CBN, all of which supported system liquidity during the week.

Analysts at Cordros capital said inflows from matured OMO bills this week (N212.73 billion) and bond coupon (N51.20 billion) will bolster system liquidity. However, liquidity mop-up and foreign exchange intervention by the CBN are likely to exert upward pressure on the overnight lending rate.

On the bond market, proceedings were similarly bearish, following a slowdown in demand from foreign investors and profit taking by local players.

As a result, average yield widened by 30 basis points w/w to close at 14.24per cent. Sell pressure was spread across the short (+43 basis points), mid (+20 basis points), and long (+27 basis points) segments, with respective yield on the JUN-2019 (+134 basis points), FEB-2028 (+45 basis points), and APR-2037 (+41 basis points) bonds, respectively.

The DMO issued a revised issuance calendar for Q1-19, indicating a reduction in the offering of the FEB-2028 (10-year) bond, from a range of N45-N50 billion to NGN15-N25 billion, as the bond, which has an outstanding value of N693.69 billion, is likely to be phased out this month. The MAR-2025 (7-year) which was previously excluded from the upcoming March auction will now be on offer (N35-N45 billion).

 

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