Story by Kayode Tokede
With the absence of Central Bank of Nigeria weekly foreign exchange intervention, the naira traded flat at N360 against the dollar at the parallel market but weakened by 0.06 per cent week-on-week (w/w) to settle at N363.46 against the dollar at the investors & Exporters Foreign Exchange (I&E FX) window.
In the Forwards market, the foreign exchange rate in the 1-month (-0.1per cent to N366.90 against the dollar) and 6-month (-0.4per cent to N385.81 against the dollar) contracts declined but increased for the 3-month (0.1per cent to N373.01 against the dollar) contract.
The rate in the 1-year contract was flat at NGN402.75 against the dollar.
At the bond market, the direction of trading in the Treasury bonds market was also bearish, as sell-offs continue to pressure yields upwards.
Consequently, the average yield across instruments rose by 43basis points w/w to settle at 14.24per cent.
According to analysts at Cordros capital, there were yields expansions recorded across all instruments save for the OCT-2019 bond, as the bond reverts to par.
“The DMO will be holding a Treasury bonds primary market auction next week, where three instruments will be offered (all through re-openings) – 12.75% FGN APR-2023, 14.55% FGN APR-2029, 14.80% FGN APR-2049.”
However, at money market, the overnight lending rate expanded by 586 basis points w/w to 18per cent on the back of the expansion in system liquidity.
“Rates undulated in the week, increasing by 1.72per cent on the first trading day before declining by 2.14per cent on the subsequent trading day. However, as system liquidity expanded to N219.17 billion on the penultimate trading day, the rate expanded.
“Next week, we expect the rate to pare at the start of the week, however, as system liquidity declines from the planned Treasury bonds PMA, we expect the rate will rise,” analysts at Cordros Capital explained.