Foreign reserves drop to $34.92bn —CBN
The Central Bank of Nigeria (CBN) has said the country’s foreign reserves dipped by $184.58 million in its week-on-week (w/w) performance to $34.92 billion as at March 3rd, 2021 as the apex bank maintained its interventions across the foreign exchange markets.
However, the naira weakened by 0.6per cent to N411.00 against the dollar at the Investors & Exporters Foreign Exchange (I&E) Foreign Exchange window and appreciated by 0.4 per cent to N480.00 against the dollar in the parallel market.
At the I&E FX window, total turnover as at March 4, 2021 decreased by 52.9per cent week-till-date (WTD) to $221.52 million, with trades consummated within the N381.00 – 427.45 against the dollar band.
“Given the expected pressure on the external reserves amid weak portfolio inflows, we expect the naira to depreciate closer to its fair value implied by the long-run REER (N453.67) in the medium term.
“Our baseline expectation is that the CBN will devalue the naira by 5.3per cent to N400/$ in the interbank market and 5.1per cent to N415/$ at the I& F EX.”
The Treasury bills secondary market ended the week on a bearish note, as the average yield across all instruments expanded by four basis points to 3.9per cent.
The performance to the reduced liquidity in the system and the pre-existing weak sentiments in the T-bills market.
Across the segments, the average yield fell by 8bps to six per cent in the OMO secondary market and by 4bps to 1.5per cent in the NTB segment.
At this week’s OMO auction, the CBN sold N90.00 billion worth of bills to market participants and maintained stop rates across the three tenors, as with previous auctions. The CBN, on Monday, rolled over maturing Special Bills (c. N4.20 trillion) for 91 days at 0.5per cent.
At money market, the overnight (OVN) rate expanded by 10.00points w/w, to 16.3per cent, as debits for CRR and CBN’s weekly FX and OMO (N90.00 billion) auctions offset inflows for OMO maturities (N124.81 billion) and FX retail refunds.
The Treasury bonds secondary market turned bearish, following market uncertainty about the direction of yields in the near term. Against this, the average yield in the space expanded by 14basis points to 9.4 per cent.
Across the curve, the average yield was lower at the mid (-26 basis points) and long (-3 basis points) segments, as investors demanded the NOV-2029 (-41 basis points) and JUL-2045 (-37 basis points) bonds, respectively. Conversely, average yield expanded at the short (+87 basis points) end, as investors took profits off the MAR-2025 (+231 basis points) bond.
