Weekly Market Review

Money Market

In the money market, the Open Buy Back (OBB) and Overnight (OVN) rates fell in weekly comparison (W-o-W) as system liquidity levels moderated in the week.

Open Buy Back (OBB) and overnight (OVN) rates opened the week higher at 17.6per cent and 18.4per cent respectively from 13.1per cent and 14.0per cent (last week) as system liquidity fell to N57.8billion from N315.3bilion recorded previous Friday. On

In the treasury bills secondary market, the performance was bullish as rates across tenors trended lower on 4 of 5 trading days. At the start of the week, average rate rose 7 basis points (bps) to 8.6per cent (from 8.5% recorded the previous Friday) but declined 47bps to 8.1% on Tuesday. Similarly, average rates trended lower by 13bps and 44bps on Wednesday and Thursday respectively before settling at 7.7per cent on Friday, down 76bps W-o-W.

 

FX Market

The external reserves sustained its downward trend as it dipped 0.3per cent W-o-W to US$40.0billion from US$40.1billion (20/11/2019).

Dealers from Afrinvest (West) Africa Limited said the CBN spot rate opened the week at ?306.95/US$1.00 and traded flat to close at ?306.95/US$1.00, depreciating 5kobo W-o-W from N306.90/US$1.00 in the previous week. At the parallel market, naira traded flat all week to settle at ?360.00/US$1.00. At the Investors’ & Exporters’ (I&E) FX Window, the NAFEX rate opened the week at ?362.25/US$1.00 and closed the week at ?362.64/US$1.00, depreciating 6kobo W-o-W from N362.58/US$1.00 the previous Friday. Dealers said activity level in the I&E Window declined this week as total turnover fell 13.7per cent to US$1.3bn from US$1.5bn recorded in the previous week.

 

FGN Bonds

The Debt Management Office held the November bond auction on Wednesday, reopening the 5-year, 10-year and 30-year instruments. A total of N150.0billion was offered (N50.0bn each for the three instruments) and subscription totaled N252.3biklion. While the shorter-dated instrument was undersubscribed by 0.9x, the medium-and longer-dated instrument recorded oversubscription with bid-to-cover ratio of 1.9x.

It also recorded 2.3x respectively. Average marginal rates declined by about .500bps across all tenors due to high demand and the APRIL 2023, APRIL 2029 and APRIL 2049 instruments were sold at marginal rate of 12.0per cent, 12.9per cent and 13.4 per cent respectively compared to previous auction rates of 14.1per cent, 14.2per cent and 14.6per cent.

In the domestic bonds market, performance was slightly bullish as investors’ focus was on the auction, leading to a marginal 4bps W-o-W decline in the average bond yield to 12.2per cebt.

The market recorded a flattish performance on Monday, a bullish outing on Tuesday (-4bps), Wednesday (-1bp) & Thursday (-1bp) and a bearish outing on Friday (+1bp). Across the term structure, only the long-term instruments enjoyed buying interest as yields fell 10bps while yields on the short-and-medium term instruments rose 5bps and 11bps respectively.