Yield on T-Bills Rise as Naira Depreciates Strongly at Investors Window

Yield on T-Bills Rise as Naira Depreciates Strongly at Investors Window

In the fixed income market, average yield on the Nigerian Treasury Bills (T-bills) rise as Naira depreciates to ₦409.67 to a dollar at Investors and Exporters Window.

It appears that the monetary policy authority is losing the battle for the soul of the local currency amidst foreign inflow scarcity.

On Monday, the T-bills market opened the week bearish albeit on a soft note, following selloffs across the intermediate to long end of the market.

Analysts at Greenwich Merchant Bank said the bearish stance resulted in a 2 basis points (bps) rise in yields to average 1.5%.

Also, the financial system liquidity opened lower at ₦177.5 billion compared to ₦208.4 billion, reflecting a 14.8% drop.

Notwithstanding, the Open Buy Back and Over Night rates marginally fell to 4.0% and 4.3%, respectively from 4.5% and 4.8% on Friday.

“This week, we expect that funding pressure might intensify as we do not expect any significant inflow into the system, asides maturing OMO bills worth ₦260.2 billion”, Greenwich stated.

Similarly, yields in the open market operations (OMO) market dipped 23bps to 6.5%, following pockets of buying interests across the tickers.

The bullish turn trails the move by the CBN last Thursday to maintain stop rates at its OMO Primary Market Auction (PMA).

In the Bond market, the average yield expanded by 6bps to 9.1%.

Across the curve, the biggest yield rise was seen at the belly (+13bps) of the curve, with the long end trailing (+5bps).

Conversely, investors positioned in instruments at the short end (- 2bps).

Although, the 23-Feb-28 instrument was the most sold (+60bps).

“We expect an uptrend in the headline inflation rate for January to be announced in the Consumer Price Index (CPI) report tomorrow.

PFAs Ride on Yields Re-pricing to Adjust Risk Appetite

“We also anticipate the DMO FGN bond auction of ₦150.0 billion evenly split across the FGN MAR 2027, FGN MAR 2035, and FGN JUL 2045 instruments on Wednesday”, Greenwich projected.

Elsewhere, the Naira was firm in the Parallel foreign exchange market at ₦473.00/USD, unchanged from Friday.

On the other hand, the I&EW rate further weakened by ₦5.00/USD to ₦409.67/USD, from ₦404.67/USD on Friday.

Yield on T-Bills Rise as Naira Depreciates Strongly at Investors Window