Yields Steady amidst Expectation of Interest Rate Hike
The fixed income market has swung to solo mode as investors await the outcome of the monetary policy committee of the central bank’s decision on the benchmark interest rate. A slew of analysts predicted that the monetary authority will step up on its hawkish stance to curb fast rising headline inflation in the country.
However, some financial experts believe further monetary tightening will impact the private sector growth and reduce the capability to increase employment levels. The need for monetary tightening has been anchored on the expectation that inflation needs to be curbed.
In the money market, there was a moderate reduction in short term rates as liquidity position improved slightly. Data from the FMDQ Exchange platform shows that the average interbank rate dropped by 17 basis points to close at 14.75% on Monday.
The slowdown occurred as the Open Buy Back rate declined by 33 basis points while the Overnight lending rate retained its prior position to close at 14.50% and 15.00%, respectively.
In the secondary market for trading existing treasury bills, traders said the proceeding was quiet. As a result, the average remained flat to close at 7.21%. Meanwhile, the Nigerian local currency, the naira, was flat at N436 to a United States dollar at the investors’ and exporters’ FX window. READ:Treasury Bill Rate Closed Flat as Investors await MPC Decision
In the bond market, trading activities on FGN bonds were somewhat calm with a bearish undertone, Alpha Morgan Capital said in market note. As a result, the average yield climbed by 2 basis points to close at 12.90%.
At the international debt capital market, traders reported that there were selloffs in FGN Eurobond. On the back of some exits traders, the average yield was up by 59 basis points to close at 13.59%.
# Yields Steady amidst Expectation of Interest Rate Hike#
