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Naira gains 2.9% to start year trading



Naira gains 2.9% to start year trading

The Nigeria local currency commenced the year on a positive note on Tuesday, 4th of January 2022 as the local currency edged up against the greenback.

Naira appreciated by 2.9 per cent to N422.67 as US Dollar at the I&E window. Data from the FMDQ showed it hit a high of N443.50 and a low of N405 in the spot region while it peaked at N452.63 high point during the day and a low of N440 in the forward market.

At the end of the trading session, investors traded a daily turnover of $109.07 million on the first trading day of the year.

Money Market & Fixed Income

In the money market, the overnight lending rate contracted by 300bps to 7.5 per cent following N70 billion inflows from OMO maturities.

The NTB secondary market was mixed, with a bullish bias, as the average yield pared by 1bp to 4.4 per cent.

Across the curve, the average yield was unchanged at the short and mid segments but contracted by 2 basis points at the long end following demand for the 233DTM (-14bps) bill. Elsewhere, the average yield expanded by 4bps to 5.5 per cent in the OMO segment.

Meanwhile, the Treasury bond secondary market was bearish as the average yield expanded by 2bps to 11.4 per cent.

Across the benchmark curve, the average yield pared by -1bp at the short and mid segments each due to demand for the APR-2023 (-4bps) and FEB-2028 (-3bps) bonds, respectively.

Conversely, the average yield expanded at the long (+6bps) end, as investors sold off the APR-2049 (+40bps) bond.

“We expect a further decline in yields in the next trading session on the back of huge demand from investors and the deliberate efforts of the Debt Management Office (DMO) to reduce borrowing costs,” say analysts at FPI Capital Research.

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