Money market

Naira appreciates against the Dollar at IEFx to N360.01

The Naira appreciated against the Dollar at the Investors  & Exporters Foreign exchange Window (I&E FXW) by 0.05 per cent to close at N360.01 amid weekly injections by Central Bank of Nigeria  (CBN) of  $210 million into the Foreign exchange market; of which $100 million was allocated to Wholesale (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

Elsewhere, the Naira against the Dollar rate remained unchanged at the interbank foreign exchange market, the parallel market and the Bureau De Change segments at N330.00/Dollar, N362.00/Dollar and N360/Dollar respectively.

Meanwhile, all dated forward contracts at the interbank over the counter (OTC) segment appreciated–spot rate, 1 month,2 months,3 months and  6 months contracts fell by 0.02per cent, 0.07per cent, 0.13per cent,  0.23 per cent and 0.40 per cent to close N305.60/Dollar, N363.73/Dollar,N367.62/Dollar, N371.41/Dollar and N385.55/Dollar respectively.

Analysts at Cowry Assets Limited in a report said, “This week, we expect stability in exchange rate amid further accretion to the external reserves as global oil prices retain its upbeat and CBN continues with the weekly intervention.”

Last week, the apex bank auctioned Treasury Bills (T bills) worth N95.20 billion via the primary market; viz: 91- day bills worth N9.52 billion, 182 -day bills worth N17.60 billion and 364-day bills worth N68.08 billion.

Also, T-Bills worth N748.69 billion were sold via Open Market Operations (OMO).

The outflows were partly offset by inflows worth N528.90 billion in matured T bills. Nevertheless, NIBOR fell for all tenor buckets amid FAAC inflows worth N647 billion: NIBOR for overnight, 1 month, 3 months and 6 months tenor buckets fell week-on-week to 4.56 per cent (from 7.6 per cent), 14.64per cent (from 14.85per cent), 15.28 per cent (from 16.01per cent) and 17.06 per cent (from 17.79per cent) respectively.

Trading in the bond market was bullish, amid the higher liquidity levels, as average yield contracted in all but one session of the week. Week-on-week, average yield dropped seven basis points, to 13.62per cent.

Demand was strong at the short (-17 bps) and mid (-3 bps) ends of the curve, with the FEB-2020 (-2 8bps) and MAR-2027 (-10 bps) bonds recording significant contractions. Yields at the long segment were flat.

Analysts at Cordros Capital, said, “We expect reduced activity next week due to anticipated squeeze in liquidity position. We however reiterate our expectation for lower yields in the short to medium term, reflecting, one, falling inflation rate, two, strengthening expectation of monetary easing, and three the FGN’s new debt management strategy.

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