Fixed Interest Securities Yields Steady, Naira Gains
The average yields on fixed interest securities closed steady while market weighs the impact of liquidity stress on the financial system. However, the Nigerian local currency held strong against the United States dollar in the official window.
Data from FMDQ Exchange reviewed by analysts indicated that the naira appreciated by 0.7% to N427.17 against the greenback at the investors and exporters foreign exchange window yesterday. This follows a report that the Central Bank of Nigeria (CBN) expects pressures on the local currency to subside in 2023.
Following pressures on the financial system liquidity that drag Nigerian banks to the CBN standing lending facility last week, short-term rates stayed at double digits in the money markets.
Financial markets have been adjusting to CBN interest rate hikes amidst walking headline inflation, in addition to a weak exchange rate that has worsened investment returns on naira assets.
At the close of the market yesterday, analysts said the overnight lending rate remained unchanged at 15.0%, as system liquidity remained in a short position, closing at N25.36 billion.
In the secondary market for trading Nigerian Treasury bills, activities ended on a mixed note as the average yield closed flat at 7.3%.
Across the curve, Cordros Capital said in a market report that the average yield contracted at the short (-1bp) end as investors demanded the 17-day to maturity (-1bp) bill but closed flat at the mid and long segments.
Elsewhere, fixed income analysts wrote that the average yield contracted by a basis point to 8.9% at the open market operation (OMO bills) segment. READ: Naira Steady at Investors Window on Stable Dollar Supply
In the bond market, trading activities also ended the day on a mixed note, according to Cordros Capital report as the average yield was unchanged at 11.8%.
Analysts said the average yield increased at the short (+1bp) end as investors sold off the APR-2023 (+6bps) FGN bond. Conversely, the average yield was flat at the mid and long segments. #Fixed Interest Securities Yields Steady, Naira Gains