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Mixed trends at FX, fixed income markets

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Expect sustained double-digit rate this week as CBN set for CRR debits – Experts
  • FX market

The naira accelerated its decline against the dollar by N7 to trade at N494 per dollar on Thursday, bringing the week to date depreciation to N11 from N483 per dollar in the parallel market.

However, the local currency remained flat and stable at N393.25 per dollar at the I&E FX market. Most participants maintained bids between N383.00 and N395.00 per dollar.

  • Treasury bills

Despite the low yield environment prevailing in the NT-Bills market, investors were willing to buy up to N445.94 billion due to the abundant system liquidity as the NT-Bills secondary market closed on a flat note, with the average yield across the curve remaining unchanged at 0.10 per cent.

Average yields across short-term, medium-term, and long-term maturities closed flat at 0.06 per cent, 0.09 per cent, and 0.13 per cent, respectively.

On Wednesday, the CBN conducted a Primary Market Auction, selling NT-Bills worth N150.60 billion across the 91-day (N20.37 billion), 182-day (N19.16 billion), and 364-day (N111.07 billion) tenors.

Stop rates trended lower as the 91-day, 182-day and 364-day tenors cleared at 0.02 percent (-2 basis points), 0.09 per cent (-6 basis points) and 0.15 per cent (-15 basis points), respectively.

Demand was robust with the oversubscription in the three tenors by 2.81x (91-day), 2.86x (182-day), and 3.01x (364-day).

Trading activity in the OMO bills market remained muted with the average yield across the curve closing at 0.15 per cent.

Mild selling pressure was seen across long-term maturities with the average yield rising by 1 basis point.

However, average yields across short-term and medium-term maturities both closed flat at 0.15 per cent each.

The highest yield increase was witnessed in the 26-Oct-21 maturity bill, which rose by 5 basis points, while the highest yield decline was seen in the 24-Aug-21 maturity bill, which fell by 5 basis points.

  • Bond Market

With the expected bullish sentiment in the market as investors seek opportunities to re-invest proceeds from the OMO bills maturities, owing to relatively better yields, the FGN bonds secondary market closed on a positive note on Thursday.

This is as the average bond yield across the curve cleared lower by 1 basis point to close at 1.61 per cent from 1.62 per cent on the previous day.

Average yields across short tenor and long tenor of the curve compressed by 1 basis point and 7  basis points, respectively; while the average yield across medium tenor of the curve advanced by 10  basis points.

Consequently, the 26-APR-2049 maturity bond was the best performer with a decline in yield of 27 basis points, while the 22-JAN-2026 maturity bond was the worst performer with an increase in yield of 48 basis points.

 

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