There are expectations that the Nigeria Interbank Offered Rate ( NIBOR) will increase in the new week in reaction to the increased Cash Reserve Ratio (CRR) to 27.50 per cent by the Central Bank of Nigeria (CBN).
The decision of the Monetary Policy Committee (MPC) of the CBN to increase the CRR by 500 basis points (bps) is to create an outlet to ease built up pressure of increased financial system liquidity created by its restrictive OMO policies according to analysts.
In doing so, and by not reviewing the Monetary Policy Rate upwards, analysts feel the monetary authority remains in alignment with the fiscal authority’s goal to boost output growth, in part, by making credit available at affordable cost to real sector players.
However, in the new week, T-bills worth N724.64 billion will mature via the primary and secondary markets which will offset T-bills worth N229.63 billion to be auctioned by CBN via the primary market, according to dealers from Cowry Assets Management Limited.
The Treasury Bills will be through: 91-day bills worth N28.02 billion, 182-day bills worth N33.68 billion and 364-day bills worth N167.93 billion.
“Hence, we expect the stop rates to decline marginally amid increasing demand for the instruments,” the dealers stated.
They further said that, against the backdrop of boost in financial system liquidity, it is expected that the Federal Government of Nigeria (FGN) bond prices will rise (with corresponding decline in yields) amid expected buy pressure at the Over the Counter (OTC) market.
Similarly, in the new week, “we expect the local bourse to close in green territory as lower fixed income yield environment is sustained despite the increase in CRR to 27.50 per cent by CBN to reduce Deposit Money Banks liquidity. Hence, investors are advised to continue to hunt for high dividend yielding stocks,” the Cowry Assets analysts suggested in a note to investors.
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