Fixed Income Market Trades Quiet as Naira Loses Weight

Fixed Income Market Trades Quiet as Naira Loses Weight

The Nigerian fixed income market trades cold and quiet on Wednesday as the local currency, the naira, continues free fall at the Investors’ and exporters’ foreign exchange window. The foreign exchange (FX) rate at the space has been worsening since last week.

As of Wednesday, the naira depreciated by 0.1% to N436.50 at the investors’ and exporters’ window. Central Bank of Nigeria conducted a primary market auction for treasury bills yesterday, as of the press time, the auction result is yet available.

In the money market, there was pressure on short-term rates, causing the interbank rate to widen following upward adjustments to open buy back and overnight lending rates. Local banks are keeping in the space to maintain daily liquidity requirements, market analysts told MarketForces Africa.

Data from the FMDQ Exchange platform shows that the overnight lending rate expanded by sixty-seven (67) basis points to 13.5% – a movement that market analysts attributed to funding pressure on the system.

In the Treasury bill secondary market, trading activities were muted, according to Cordros Capital as participants anticipated the outcome of the primary market auction (PMA). READ: Fixed Income Market Trades Quiet Ahead of DMO Bond Auction

The Central Bank of Nigeria conducted an auction with a significant subscription level seen. Thus, the average yield was flat at 7.7%. Similarly, the average yield remained at 10.8% in the open market operations (OMO bills) segment.

Also, the FGN bond market traded quietly, as the average yield was unchanged at 12.9%. Across the benchmark curve, Cordros Capital wrote that the average yield expanded at the short (+1bp) end due to profit-taking on the MAR-2024 (+7bps) bond.

The average yield closed flat at the mid and long segments, traders said. #Fixed Income Market Trades Quiet as Naira Loses Weight

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