Foreign reserves drop to $33.58bn — CBN
By Kayode Tokede
The Central Bank of Nigeria (CBN) said the nation’s foreign reserves dropped to $33.58billion as at August 12, 2021.
The foreign exchange buffer in August gained $99.9million to $33.58billion from $33.48billion it was early in the month.
Meanwhile, the Naira appreciated by 0.1per cent to N410.80 against the Dollar at the Investors & Exporters Foreign Exchange (I&E) window but depreciated by 1.0 per cent to N515.00 against the Dollar in the parallel market.
At the I& FX window, a total turnover (as of 12th August 2021) decreased by 15.6 per cent WTD to $571.97 million, with trades consummated within the N400.00 – 421.96 against the Dollar band.
According to analysts at Investment One research ,“We expect improved liquidity in the IEW over the medium term, given our expectation of (1) increased inflows from crude oil receipts, and (2) in flows from FCY borrowings ($6.18 billion) and IMF SDR ($3.40 billion). Accordingly, we expect the naira to remain relatively range-bound (N410.00/USD – N415.00/$) at the I & E FX.”
Meanwhile , the overnight (OVN) rate contracted by 325 basis points w/w, to 17.3per cent.
The healthy liquidity position from last week and this week’s inflows from OMO maturities (NGN80.00 billion) supported the contraction amid outflows for net NTB issuances (N104.84 billion) and the CBN’s weekly FX auction.
“We expect tighter liquidity in the system in the coming week, as debits for the week’s FGN bond and CBN FX auctions will likely outweigh expected inflows from OMO maturities (N91.00 billion).”
They expressed that, “Trading in the Treasury bills secondary market closed on a bullish note this week, following (1) increased demand for OMO bills on the back of limited supply from the CBN, and (2) as market participants sought to fill lost bids from Wednesday’s NTB PMA. Consequently, the average yield across all instruments contracted by 54bps to 6.2 per cent.
“Across the market segments, the average yield at the OMO segment contracted by 12bps to 7.7%. Notably, we highlight that there has been no primary market offering in the segment for four consecutive weeks.
“Similarly, the average yield at the NTB segment contracted by 95bps to 4.7 per cent. At the PMA, the CBN offered bills worth N51.49 billion across the three conventional maturities.
“Demand was strong, with a subscription level of N398.38 billion (Bid-to-offer ratio: 7.7x; previously 2.1x) recorded. Eventually, the CBN allotted NGN156.33 billion – N4.80 billion of the 91D, N3.75 billion of the 182D and NGN147.78 billion of the 364D bills – at respective stop rates of 2.50 per cent (unchanged), 3.50% (unchanged), and 7.35 per cent (previously 8.20 per cent).
“We envisage the trend of lower yields on T-bills will persist in the coming week, as we maintain our view of improved buying activities as participants react to the lower rate on the recently (re)issued bills and the CBN’s continued absence from the OMO primary market.
“ Bullish sentiments persisted in the Treasury bonds secondary market following improved demand, as investors anticipate lower stop rates at next week’s auction.
“Specifically, the average yield contracted by 38bps to 11.6%. Across the benchmark curve, the average yield declined at the short (-62bps), mid (-24bps) and long (-33bps) ends as investors’ interests piqued on the JAN-2022 (-156bps), FEB-2028 (-46bps) and MAR-2035 (-55bps) bonds, respectively.”
