Yield on Treasury Bills Inflates as Naira Gains Against Dollar
The Nigerian Treasury bills average yield inflates nine (9) basis points Tuesday as the local currency, naira, appreciates at the investors and exporters foreign exchange window.
Naira was traded at N410.67 to a dollar in the investors and exporters window today, according to data from the FMDQ Exchange platform but closed flat at N532.00 in the parallel market while banks quote at N413.
In the money market, interbank rates see a further moderation due to improved system liquidity in the absence of pressure or rundown on financial position.
Market data shows that the overnight lending rate contracted by 125 basis points to 7.3%, the slowdown which was supported by N119.07 billion inflows from open market operations (OMO) maturities.
In a market report, Cordros Capital said the Nigerian Treasury bills secondary market closed with bearish sentiments as the average yield expanded by 9 basis points to 4.7%.
Across the benchmark curve, analysts said average yield expanded at the short (+16bps) and mid (+30bps) segments following sell-offs of the 79 day to maturity (+32bps) and 142 day to maturity (+61bps) bills, respectively.
Conversely, the average yield contracted at the long (-9bps) end due to demand for the 205 day to maturity (-46bps) bill. Elsewhere, the average yield at the OMO segment closed flat.
Analysts however added that trading in the Treasury bond secondary market was also bearish as the average yield expanded by 2 basis points to 11.0%.
Across the benchmark curve, average yield expanded at the short (+2bps), mid (+2bps) and long (+2bps) segments as investors sold off the JAN-2022 (+6bps), JUL-2030 (+6bps) and MAR-2036 (+18bps) bonds, respectively.
In a new report, Coronation Merchant Bank said opening market liquidity was reported at N445.4 billion on Friday, which saw overnight and repo rates closed within a range of 10.0-13.5%.
It noted that the secondary market for Nigerian Treasury Bills was relatively active last week as average Nigerian treasury bills yield declined by 34 basis points over the week to close at 4.6%.
Similarly, the average yield for OMO bills was up a basis points week on week to close at 6.1%. The secondary market for Federal Government bonds was also active on the back of improved system liquidity as average yield declined by 11bps to close at 11.0%.
“At the Eurobond market, the average yield of the sovereigns under our coverage declined by 19bps to 5.7%”, Coronation Merchant Bank said in the report.
On Thursday last week, the CBN sold N50.0 billion worth of OMO bills to market participants and maintained the stop rates across the three tenors, unchanged from prior auctions (82-day: 7.0%, 152-day: 8.5%, and 327-day: 10.1%).
Based on data from the FMDQ, Nigerian Autonomous Foreign Exchange (NAFEX) turnover showed a week on week decline of US$89 million from US$216.5 million to US$127.5 million on Friday.
The Investors and exporters FX window recorded inflows of USD403 million with the CBN accounting for 27.02%, the FPIs accounting for 27.07%, non-bank corporates accounting for 22.65%, and others accounting for 23.26%. Over the past week, Nigeria’s external reserves increased by 1.5% to US$34.1 billion.
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Yield on Treasury Bills Inflates as Naira Gains against Dollar
