Money Market Review

Liquidity levels in the money market remained robust despite T-bills and Open Market Operation (OMO) auctions which cumulatively mopped up N578.6billion. System liquidity opened the week at N188.0billion, significantly lower than N607.8billion at the close of the previous week, but increased to N395.1billion by the end of the week.

Consequently, money market rates trended lower during the week. Although Open Buy Back (OBB) and Overnight (OVN) rates opened the week at 9.4 per cent and 9.9per cent respectively, increased liquidity dragged rates lower. OBB and OVN eventually closed the week at 4.3 per cent and 5.3per cent, down 2.5per cent and 2.0 per cent respectively when compared week by week.

ALSO READ: Forceful takeover of NASS will harm democracy, PDP warns FG

Dealers from Afrinvest (West) Africa Limited said performance in the T-bills market was bullish as average yield opened the week at 11.5per cent, 0.1 per cent lower than 11.6 per cent on the preceding Friday and further declined to 11.4 per cent  by Thursday before rising on Friday to close at 11.5 per cent, down 12 basis points (bps) in  weekly comparison.

Dealers said  sell offs on the shorter dated instruments sustained buy interest on the longer tenors and  drove the positive performance.

Foreign ExchangeMarket

The CBN’s spot rate again depreciated when observed on weekly basis , losing 5 kobo in value, to settle at N305.95/US$1.00 by the last trading day despite trading flat till midweek at N305.90/US$1.00. However, the parallel market rate closed flat at N360.00/US$1.00. In line with the spot rate, the naira depreciated slightly at the Investors and Exporters’ (I&E) FX Window by 39 kobo to N362.67/US$1.00 from N362.28/US$1.00 in the previous week whilst activity level weakened 35.4per cent  to US$0.6billionn from US$0.9 billion recorded in the preceding week. The total value of open contracts of the Naira settled over the counter (OTC) foreign exchange (FX) futures in the FMDQ OTC futures market rose 0.6 per cent to US$4.4 billion from US$4.3 billion in the prior Friday. Dealers said instrument with the most subscription was the recently introduced JUL-2019 instrument with a total market value of US$24.1m (contract price: N363.58).

Bond Market

Across domestic and international bonds, performances were mixed as investors reacted to specific news in each market said Afrinvest in a not to clients. The local bond market closed bullish last week after a negative performance of the prior week with yields falling on 4 of 5 trading sessions to settle at 13.86per cent from 13.90 per cent  recorded the previous Friday; average yield moderated 4bps W-o-W. Nonetheless, the yield curve maintained its normality for the fourth week running as investors positioned across both the shorter and longer end of the curve. Although average yield across the shorter end of the curve fell 60bps to 12.7per cent, there was a 3bps decline on longer tenors instruments, settling at 14.1 per cent.

The bearish sentiment in the international bond market  filtered into the Nigerian corporate Eurobond market as yields on 6 of 11 instruments advanced W-o-W, pushing the average yield 2bps higher W-o-W. Whilst fears around emerging market assets are still evident, given the policy normalization and attractive bond yields in the US, dealers are of the view that investors will continue to seek opportunistic positions in riding the yield curve.