Naira Makes Mild Recovery against USD at Investors Window
Nigeria’s local currency, Naira, recorded a mild gain at Investors and Exporters window amidst foreign exchange scarcity.
In the currency market, the Naira rate recovered a mild gain at the I&E Window, rising by 0.77% (₦3.00) to ₦390.25 after it had lost ₦7.
Naira was, however, unchanged at ₦379 at the Nigeria’s central bank official window.
In the parallel market, the Naira remained under pressure, losing 0.20% (or N1.00) to ₦495.00 as the external reserves fell to US$35.44 billion.
In the money market today, funding rates maintained an upward trend, albeit marginally, as rates remained depressed within single digits.
At the close of day, money market rates – open buyback (OBB) and overnight rate (OVN) – further rose by 50bps apiece to 1.25% and 1.50% respectively.
Meanwhile, financial system liquidity remain strong, though opened lower N295.48 billion as against yesterday’s open of ₦340.73bn.
Thus, analysts expect OMO bills worth ₦418.92 billion to mature, which would further raise liquidity level and perhaps add pressure to falling yields.
Also, the fixed income market closed mixed Friday. At the front end of the market, discount rates on benchmark Nigerian Treasury Bills were unchanged at 0.10%.
However, buying sentiment returned to the secondary OMO segment of the market, as benchmark OMO bills declined by 3bps to 0.12%.
In the bond market, sentiments remained bullish amid sustained interest in long duration bonds (-8bps to 5.79%).
The benchmark bond yield curve compressed by an average of 4bps to 4.06%.
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Given the substantial OMO maturity profile over the next few weeks, as well as thin supply of government securities, we expect bond yields to remain defensive in the near term.
Naira Makes Mild Recovery against USD at Investors Window
