T-Bills Yield Steadies as Naira Hits Fresh Low in Black Market
Average yield was steadied in the Treasury Bills secondary market on Monday as Nigerian currency, naira hits a fresh low in the black market where currency traders demand N549 for a dollar.
In the investors and exporters foreign exchange window, the local currency also depreciated by 0.2% to N412.75 amidst unmet demand in the official window. However, Banks quote the exchange rate at N413, according to inside sources as the apex bank warns operators about its foreign policy infraction.
In the money market, open buy back (OBB) and Overnight (OVN) lending rates inched higher amidst low inflow in the financial system, resulting in pressures on short term transactions rates. Read Also: Naira Reclaims Value on Black Market, Official Window
Specifically, the overnight lending rate expanded by 25 basis points on Monday to 14.75% in the absence of any significant inflows into the system, according to analysts at Cordros Capital. Data from the FMDQ Platform shows that open buyback expanded 50 basis points to 14.50%.
Activities in the fixed income market remain relatively quiet and cold amidst low issuance from the Nigerian debt management office while the CBN remains cautious with the primary market auction and few open market operations thus far.
In the secondary market, the Nigerian Treasury bill was flat as the average yield stayed unchanged at 4.9%. Similarly, the average yield at the open market operations segment remained unchanged at 6.2%.
Elsewhere, trading in the federal government bond secondary market was mixed, albeit with a bearish tilt, as the average yield expanded by a basis point to 11.1%.
Read Also: Bleak Future for Naira as Foreign Reserves Tumble
Across the benchmark curve, analysts see average yield expanded at the long (+3bps) end, as investors sold off the APR-2049 (+24bps) bond but pared at the short (-1bp) end following demand for the APR-2023 (-2bps) bond; the mid-segment closed flat.
The Nigerian naira extended falls against the dollar on the black market on Monday to hit a record low of N549. Naira has seen an unofficial devaluation following the CBN decision to cut off dollar supply to the bureau de change operators in July.
But CBN remains unfazed as officials hinted at investors conference held virtually last week that apex bank worries about supply, not a black-market valuation of the local currency.
T-Bills Yield Steadies as Naira Hits Fresh Low in Black Market
