FX reserves drop to $34.44bn –CBN
By Kayode Tokede
The Central Bank of Nigeria (CBN) has said the foreign exchange reserves sustained its decline, as outflows from the reserves outstripped inflows.
Thus, it dipped by $151.21 million Week-on-week (w/w) to $34.44 billion as at March 17, 2021.
However, the naira weakened by 0.2per cent to N410.00 against the Dollar at the Investors & Exporters (I&E) Foreign Exchange but traded flat at N485.00 against the Dollar at the parallel market.
At the I& FX window, total turnover (as of 18th March 2021) decreased by 24.3per cent Week-Till-Date (WTD) to $329.74 million, with trades consummated within the N390.00 – 412.00 against the Dollar band.
According to analysts at Cordros Research, “We expect improved liquidity in the I & FX window over the medium term, given the higher oil prices and an expected increase in crude oil production volume.
“Accordingly, we expect the naira to remain relatively range-bound (N410.00/$ – N415.00/$) at the I & FX window. Similarly, we believe the CBN will devalue the naira by 5.3per cent to N400.00/$ at the interbank market to narrow the gap with the IEW rate.”
Meanwhile, the Treasury bonds secondary market turned bearish, as investors reacted to the weak economic data released early in the week – February 2021 CPI: 17.33per cent; Q4-20 Unemployment: 33.28% – and traded cautiously in anticipation of MPC’s rate decision next week.
Consequently, the average yield in the space expanded by 26basis points to 9.5per cent.
Across the benchmark curve, the average yield was higher at the short (+44 basis points), mid (+27 basis points), and long (+12 basis points) segments, following profit-taking on the JAN-2026 (+121 basis points), MAR-2027 (+56 basis points) and APR-2037 (+37 basis points) bonds, respectively.
The Treasury bills secondary market closed the week on a bearish note, as the tight system liquidity continues to force sell-offs from banks.
Also, there was some level of inactivity from market participants, as they shifted their focus to the PMAs in both market segments.
Against the preceding, the average yield across all instruments expanded by 13basis points to 5.3per cent. Across the market segments, the average yield declined by 19basis points to 6.6 per cent at the OMO secondary market and expanded by 64bps to 3.5per cent at the NTB segment.
At this week’s OMO auction, the CBN sold N100.00 billion worth of bills to market participants and maintained stop rates across the three tenors, as with previous auctions.
At the NTB auction, the CBN offered N47.06 billion – N1.50 billion of the 91-day, N8.39 billion of the 182-day, and N37.18 billion of the 364-day – in bills and ultimately allotted N61.90 billion. The auction stop rates were unchanged at 2.00per cent and 3.50 per cent on the 91D and 182D bills but increased by 50basis points to 7.00 per cent on the 364D bill.
