Average Money Market Rate Fell By 3.21% To Settle At 12.54%

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Monday, January 28, 2019   03:35 PM / Anochoria AM Research

 

Money Market 

The money market rate decreased last week as the Overnight rate (OVN) and Open Buy Back (OBB) fell to 13.00% and 12.08% respectively. Consequently, the average money market rate fell by 3.21% to settle at 12.54% due to the reduction in the System liquidity to cN86bn from N381bn in the previous week. Major outflow for the week included: OMO sales of cN787bn and weekly Wholesale, Invisible and SME FX auction of $210mn while inflow for the week included: OMO maturity of cN380bn. 

We expect the rate to close higher this week as CBN prepared for another round of T-bill Primary Market Auction, biweekly FX intervention and anticipated OMO auctions during the week.


Instrument

18/01/2019

25/01/2019

Change

OBB

15.33%

12.08%

-3.25%

OVN

16.17%

13.00%

-3.17%


Source: Anchoria AM Research, FMDQ OTC

 

Forex: USD/NGN

The CBN Official rate continued its downward trend to close at N306.80/$, a 0.02% decrease. Also, the rate in the Investors and Exporters’ FX Window fell by 0.09% to close at N362.46/$. We observed a reduction in the market turnover in the I&E Window to $1.26 billion during the week. However, Naira at the parallel market depreciated marginally to close at N364.50/$ (using the Everdon BDC Rate). 

We expect rates in the parallel market to remain constant as the apex bank continues to supply FX into the market, coupled with its frequent Wholesale and Retail SMIS programme.

18/01/2019

25/01/2019

Change

CBN Official Rate

306.85

306.80

-0.02%

I&E FX Window

362.79

362.46

-0.09%

Everdon BDC Rate

362.50

364.50

+0.55%

Source: Anchoria AM Research, FMDQ OTC

 

Commodities

The Brent Crude Oil fell by 1.69% while WTI Crude Oil rose by 0.20% to close at $61.64 and $53.69 per barrel respectively, on the backdrop of the political turmoil in Venezuela coupled with the possible imposition of sanction by the US government on Venezuelan exports after recognising opposition leader Juan Guaido as Interim President this week, prompting the current President Nicholad Madueo to cut ties with Washington

 

Fixed Income 

Bond: FGN

The Bond Market closed on a flat note last week with demand seen on few maturities during the week. Notable amongst them include 2023s (-0.24%) and 2037s (-0.21%).  Average yields rose marginally by 1bp to close the week at 15.24%. As anticipated, the Debt Management Office (DMO) release its Q1 Bond Calendar with the Federal Government proposing to raise N400 billion via Bond issuance in Q1 2019. Also, the Monetary Policy Committee left all the key rate unchanged. MPR (14.00%), LR (30.00%) and CRR (22.50%). 

We anticipate lull investors activities in the first 2 trading days this week as investors prepare for the first FGN Bond Auction on Wednesday, 30 January, 2019.

Secondary Market

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Source: Anchoria AM Research, FMDQ OTC

 

Treasury Bills

Despite the reduction in the system liquidity during the week, the treasury bills market traded on a bullish note. Consequently, the average yield fell by 50bps to close the week at 14.41%. This can be attributed to renewed buying interests by offshore investors in the Nigerian market. Market activities were relatively quiet as the value of transactions fell to N1.41 trillion from N1.83 trillion in the previous week.

 

We anticipate a bearish sentiment in the T-bills market in the early part of the week as market participants prepare for T-bills Primary Market Auction on Wednesday, 30 January, 2019.

Secondary Market

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Source: Anchoria AM Research, FMDQ OTC

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


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