Average Market Rate Rose By 0.69% To Settle At 25.89% As CBN Continued Its Liquidity Mop Up

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Monday, December 17, 2018 / 01:38 PM / Anchoria AM Research

 

Money Market

The money market rate increased last week as the Overnight rate (OVN) and Open Buy Back (OBB) rose to 27.21% and 24.57% respectively. Consequently, the average money market rate rose by 0.69% to settle at 25.89% as the CBN continued its aggressive liquidity mop up during the week. The System liquidity is estimated at N16bn from N438.7bn in the previous week. Major inflow for the week included: OMO maturity and PMA repayment of cN550bn. 

Major outflow for the week included: OMO sales of cN63.38bn on Monday, cN38.84bn on Tuesday, cN25.96bn on Wednesday, cN295.81bn on Thursday and cN78.23bn on Friday; and weekly Wholesale, Invisible and SME FX auction of $210mn. 

We expect the CBN to continue its aggressive mop up activities this week, hence anticipated increase in money market rate.

 

Instrument

07/12/2018

14/12/2018

Change

OBB

24.33%

24.57%

+0.24%

OVN

26.08%

27.21%

+1.13%

Source: Anchoria AM Research, FMDQ OTC

 

Forex: USD/NGN

The CBN Official rate continued on its upward trend to close at N306.90/$, a 0.02% increase while the rate in the Investors and Exporters’ FX Window fell by 0.03% to close at N365.23/$. 

We saw a continued appreciation in the country’s currency at the parallel market last week with a decline in rate by 0.27% to close at N365.00/$. 

Despite an increased festive demand for dollars as we approach the close of the year, we expect the dollar remain stable in short term.


07/12/2018

14/12/2018

Change

CBN Official Rate

306.85

306.90

+0.02%

I&E FX Window

365.33

365.23

-0.03%

Everdon BDC Rate

366.00

365.00

-0.27%

Source: Anchoria AM Research, FMDQ OTC

 

Commodities

The Brent Crude and WTI Crude Oil fell by 2.31% and 2.54% to close at $60.28 and $51.20 per barrel despite recent oil supply cut by OPEC and non-OPEC producers and decline in US crude oil inventories. 

Factor that contributed to the decline included weak economic data from China pointed to lower fuel demand in the world's biggest oil importer.

 

Fixed Income

Bond

The Bond Market closed on a bullish note last week with yields compressing across most maturities with the demand more pronounced on 2028 and 2037 bonds. Average yield fell by 5bps to close the week at 15.55%. 

We expect the market to trade bearish this week as market participants are expected to remain cautious ahead of December Bond Auction and Expected FGN Sukuk Bond Issuance

 

Secondary Market

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Source: Anchoria AM Research, FMDQ OTC

 

Treasury Bills

Due to CBN’s aggressive mop up of the system liquidity during the week, the treasury bills market traded on a bearish note. Consequently, the average yield rose by 8bps to close the week at 15.60%. Market activities were relatively quiet as the value of transactions fell to N1.49 trillion from N1.56 trillion in the previous week.

 

Friday OMO Auction Results

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Secondary Market

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Source: Anchoria AM Research, FMDQ OTC

 

Anchoria Research: +234 908 720 6076;  research@anchoriaam.com

 

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