Monday, August 03, 2020 / 01:52 PM / By
Anchoria AM Research / Header Image Credit: Forex Systems Books
The average money market rate fell marginally by 0.15% to settle at 1.75% from 1.90% in the previous week. This is due to the previous inflows from FGN Bond coupon payments - N94.42 billion and OMO maturities - N25.36 billion which sustained the system liquidity all through the week.
For the Interbank rate, Open Buy Back (OBB) closed at 1.40% compared to 1.60% in the previous week while Overnight rate (OVN) closed at 2.10% compared to 2.20% the previous week.
We expect the system liquidity to remain buoyant in this week barring any surprise CRR debit from CBN.
The foreign exchange market remained illiquid last week as the Naira depreciated further. At the Investors & Exporters (I&E) forex window, naira appreciated by 25 kobo as the dollar was quoted at N389.25 compared to N389.50 the previous week. In the parallel market, the rate rose to N475/$. The increase in USD rate is attributable to the scarcity of the currency in the parallel market.
We expect a continuous dwindling in the FX liquidity across all FX windows this week.
The secondary sovereign Bond market closed bullish last week as the average yield fell by 28bps to close at 7.09% compared to 6.81% in the previous week. The highest yield decline was witnessed in the MAR-2027 bond which declined by 125bps to close at 6.75% compared to 8.00% the previous week while the highest yield increase was seen in the JUL-2034 bond which rose by 31bps to close at 8.88%.
The Sovereign Eurobond market closed on a bullish note as the average yield fell by 4bps to close at 7.28% compared to 7.32% the previous week. In the same vein, the corporate Eurobond market closed bullish as the average yield fell by 13bps to close at 7.64% compared to 7.77% the previous week.
We expect continuous interest in the Eurobond market due to anticipated positive outlook in the crude oil market.
The Treasury bills market closed bullish last week as the average yield fell by 36bps to close at 1.75%. In the same vein, OMO bills fell by 41bps to close at 4.23% compared to 4.96% the previous week.
At the primary market auction held last week, the CBN offered N265.95 billion worth of bills to investors. The CBN offered N49.84 billion for 91-day, N54.59 billion for 182-day and N161.52 billion for 364-day at respective stop rates of 1.20%, 1.50% and 3.40%.
We expect increased demand in the T-bills market as investors take position in the market.
Oil prices rebounded last week after the U.S posted the second quarter GDP figure. Oil prices rallied to its familiar territory - roughly $40 for WTI and $43 for Brent. On a week on week basis, Brent oil rose by 69bps to close at $43.64 per barrel compared to $43.34 the previous week while WTI fell by 2.18% to close at $40.44.
Gold futures continued its increase on a week on week basis as it closed at $1,985.90 per ounce, this is a 2.62% increase on a weekly basis. This can be attributed to uncertainty and high liquidity concerns globally as a result of economic stimulus by different governments.