Foreign reserves appreciate by $636.61m WoW
The Central Bank of Nigeria (CBN) has said the country’s foreign reserves appreciated by $636.61million in its week-on-week (WoW) performance to close at $41.75billion.
Analysts have said the accretion in the foreign exchange buffer continued week following the inflows from International Monetary Fund (IMF) SDR and foreign currency borrowings.
Meanwhile, the naira was flat w/w at N415.10 against the dollar at the Investors & Exporters (I&E) window but appreciated by 1.1per cent w/w to N565.00 against at the parallel market.
At the IEW, total turnover (as of 28th October 2021) declined by 17.5 per cent WTD to $702.24 million, with trades consummated within the N404.00 – 453.15/USD band.
According to analysts at Cordros capital, “We expect improved liquidity in the IEW over the medium term, given our expectation of (1) increased oil inflows in line with the rise in crude oil prices and (2) inflows from FCY borrowings ($6.18 billion) and IMF SDR (USD3.40 billion).
“Accordingly, we expect the naira to remain relatively range-bound (N410.00/USD – N415.00/USD) at the IEW.”
They expressed further that, “the overnight (OVN) rate contracted by 75 basis points w/w to 18.5per cent as inflows from FAAC disbursements (N438.64 billion), FGN bond coupon payments (N160.32 billion) and OMO maturities (N93.00 billion) outweighed funding pressures for CRR debits, net NTB issuances (N85.00 billion), CBN’s weekly OMO (NGN19.00 billion) and foreign exchange auctions.”
In the coming week, we expect the OVN rate to trend lower in the absence of significant funding pressures, amid expected inflow from OMO maturities (N103.80 billion).
“The Treasury bills secondary market traded with mixed sentiments as the average yield remained unchanged at 5.9%.
“Across the market segments, the average yield contracted by 7bps to 6.4per cent at the OMO segment but expanded by 10bps to 5.5% at the NTB segment, following the introduction of new bills to the secondary market.
“At this week’s NTB PMA, the CBN offered NGN150.05 billion for sale and eventually allotted NGN235.05 billion – N2.68 billion of the 91D, N2.02 billion of the 182D and N230.34 billion of the 364D bills with respective stop rates of 2.50% (unchanged), 3.50% (unchanged), and 6.99% (previously 7.25%). With a subscription level of NGN431.12billion, we highlight that demand was strong at this auction (Bid-cover ratio: 1.8x).
“We expect yields to trend lower in the coming week, as investors react to the recent moderation in stop rate at the NTB primary market.”
