WeekAhead-FX: Naira seen stable as N826.55bn treasury bills, OMO maturities hit financial market

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Nigeria’s financial market would be awash with liquidity from the maturing treasury bills and Open Market Operation (OMO) worth N826.55 billion next week.

Consequently, the stop rates for the issuances are expected to decline due to demand pressure according to analysts at Cowry Asset Management Limited.

The breakdown of the inflows showed that N490.46 billion worth of treasury bills will mature via the primary and the secondary markets which will outweigh T-bills worth N154.37 billion to be auctioned by the Central Bank of Nigeria (CBN) via the primary market; consisting of 91-day bills worth N49.84 billion, 182-day bills worth N10.62 billion and 364-day bills worth N93.92 billion. Also, N336.09 billion will mature from OMO.

Last week, the CBN refinanced N100 billion worth of OMO bills from mature T-bills worth N296.03 billion. Hence, the financial system liquidity was boosted by the net position of N196.03 billion, with a resultant drop in Nigerian Inter-bank Offered Rate (NIBOR) for most tenor buckets, a report by Cowry Asset Management said.

NT-Bills secondary market closed on a positive note on Friday with average yield across the curve declining by 8 bps to close at 0.42 percent from 0.50 percent on the previous day, FSDH Research said in a report.

Average yields across short-term, medium-term, and long-term maturities compressed by 3 bps, 29 bps, and 1 basis point, respectively, due to maximum buying interest witnessed in the NTB 25-Feb-21 (-37 bps), NTB 11-Mar-21 (-32 bps), and NTB 11-Feb-21 (-28 bps) maturity bills.

At the foreign exchange market, Nigeria’s currency remained stable across the foreign exchange (FX) segment at the weekend as the market remained calm following the 72 hours curfew declared by some state governments to curtail violence by hoodlums who hijacked the #EndSARS protest

Most black market operators have been absent from the market since Wednesday. However, data from Abokifx showed that Naira was stable at N463, elsewhere before the curfew Naira exchanged with the dollar at N461.

The local currency was stable also at N460 at the Bureau De Change (BDC) segment of the foreign exchange market.

At the Investors and Exporters (I&E) forex window, Naira remained stable at N386.00 per dollar. Analysts at FSDH Research said most participants maintained bids between N383.00 and N394.00 per dollar.

“We expect Naira/USD to depreciate at most market segments in the wake of the disruptions to economic activities during the just concluded week,” analysts at Cowry Asset said.

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