T-Bill Rate Jumps 14 Basis Points as Market Reacts to MPC Decision
The Nigerian Treasury bill (T-Bill) recorded a 14 basis points jump as the benchmark rate closed at 5.51% Wednesday after the monetary policy committee of the Central Bank voted to hold key rates a day earlier.
In the money market, financial system liquidity improved from a deficit of N327.3 billion on Tuesday to N293.7 billion on Wednesday. Investment banking experts at Chapel Hill Denham said this was driven by a significant reduction in activities in the Standing Lending Financing (SLF) window.
Consequently, the open buyback and the overnight rates dropped by 1.5% and 1.25% points to close the day at 13.5% and 14% respectively. Due to liquidity pressure, some banks had camped at the Central Bank’s standing lending financing window to close daily cash requirements.
Meanwhile, sentiments in the fixed income market were mixed on Wednesday as investors reacted to the MPC decision to hold the Monetary Policy Rate (MPR) flat, and the NTB auction that held during the day.
According to Chapel Hill Denham, the NTB benchmark curve expanded by 14bps to close at 5.51%, with some bullish interest on the mid-end of the curve. Likewise the open market operations (OMO) benchmark curve expanded by 7 basis points to close at 9.08%.
In the bond segment, analysts noted sentiments were mostly bearish but this was offset by strong sell-off on some maturities. The bond benchmark curve expanded sparsely by 1bps to 13.39%.
In a related development, the Nigerian local currency, Naira, traded almost flat against the USD to close at N411.50 in the Investor & Exporter (I&E) window. In the parallel market, the local currency shed 0.21% or 21 kobo against the USD at 487.00.
“We believe the mild movement in the parallel market is a reaction to the convergence of the official and the Nigerian Autonomous Foreign Exchange (NAFEX) rate on the CBN website. Amidst low accretion, the nation’s external reserves extended its decline, closing at US$34.29 billion on Wednesday.
T-Bill Rate Jumps 14 Basis Points as Market Reacts to MPC Decision
