Treasury Bills Yield Steadies as Naira Slides at Official FX Window

Treasury Bills Yield Steadies as Naira Slides at Official FX Window

The average yield on Nigerian Treasury bills steadies on Thursday at the secondary market as naira, the Nigerian local currency falls at the investors and exporters foreign exchange window.

Naira depreciate by 0.1 per cent to close at N413.68 to a United States dollar at the window but the local currency falls big at the parallel market.

While the Central Bank remain unfazed with the unofficial devaluation of the local currency at the black market, many analysts still think the space represent the true value of the local currency.

Naira has suffered three times devaluation since the pandemic breaks in 2020 due to dollar shortage which prompted CBN to initiate capital control, thus making foreign investors exits difficult.

At the monetary policy committee, the CBN maintains the status quo on benchmark interest rates, the decision that makes Nigeria’s financial market unattractive since the inflation rate keeps the return on funds negative.

In the money market, pressures on short term interest rates eased as a result of inflow into the financial system recorded today. Data from the FMDQ platform shows that open buy back (OBB) declines 200 basis points to 15%.

Also, the overnight (OVN) lending rate contracted at the same rate of movement to 16.0%, a situation analysts attribute to N19.12 billion inflows from FGN bond coupon payment.

As the fixed income market continues to trend unimpressively, the Nigerian Treasury bills secondary market closed flattish again on Thursday as the average yield remained unchanged at 5.5%.

Similarly, the average yield at the open market operations (OMO) segment closed flat at 6.4%.

In the bonds space, analysts at Cordros Capital said trading activities in the secondary market was mixed, albeit with a bearish tilt, as the average yield expanded slightly by a basis point to 11.1%.

Across the benchmark curve, average yield expanded at the mid (+6bps) and long (+4bps) segments, as investors sold off the APR-2029 (+17bps) and MAR-2050 (+19bps) bonds, respectively; the short end closed flat.

Investors oversubscribed federal government N150 billion re-openings at its bond primary market auction conducted by the Debt Management Office.

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Treasury Bills Yield Steadies as Naira Slides at Official FX Window