Treasury Yield Tumbles as Naira Steady Against Dollar
Treasury bill yield Tumbles 15 basis points on Tuesday amidst ongoing rally in the Nigerian Exchange (NGX) as the local currency steady against United States dollar in the foreign exchange market.
Nigerian local currency was exchanged at N411.50 a dollar at the Investors and Exporters window but the local currency appreciated by 6 per cent in the parallel market to N509 after the initial market rout last week.
Following the central bank decision to cut dollar supply to bureau de change, the naira has been stable across the counter at N412 in Nigerian banks.
In the absence of significant inflow into the financial system, the money market faced pressure as the interbank rate jerked up.
The overnight lending rate expanded significantly Tuesday, rising by 225 basis points to 8.0%.
In a market report, analysts at Cordros Capital Limited said trading in the Nigerian Treasury Bill secondary market ended on a bullish note.
Treasury space has remained bullish for the most part of the third quarter due to low catalysts that could drive rates repricing amidst a slowdown in spot rates.
Consequently, analysts see the average yield contracted by 15 basis points to settle at 5.7%.
Across the benchmark curve, it was noted that the average yield also contracted at the short (-1bps), mid (-22bps) and long (-21bps) segments due to demand for the 86 day to maturity (-5bps), 177 day to maturity (-35bps) and 205 day to maturity (-45bps) bills, respectively.
Elsewhere, the average yield at the open market operations (OMO) segment was flat 8.1%. Similarly, the Treasury bond secondary market was as well bullish as the average yield tapered by 4 basis points bps to 11.9%.
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Across the benchmark curve, the average yield constricted at the short (-5bps) and mid (-11bps) segments due to demand for the JAN-2022 (-33bps) and APR-2029 (-30bps) bonds respectively.
However, analysts see average yield at the long end of the curve flatten.
Treasury Yield Tumbles as Naira Steady Against Dollar
