Average Money Market Rate Fell By 4.28% To Settle At 10.27%

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Average Money Market Rate Fell By 4.28% To Settle At 10.27%

Monday, April 01, 2019 03:48 PM / Anchoria AM Research

 

Money Market

The money market rate decreased significantly last week as the Overnight rate (OVN) and Open Buy Back (OBB) fell to 10.67% and 9.86% from 14.83% and 14.25% respectively. Consequently, the average money market rate fell by 4.28% to settle at 10.27% due to the increase in the System liquidity to cN440.7bn from cN18.5bn in the previous week. Major inflow for the week included: OMO maturity of cN76bn, rental payment in Sukuk bond of cN8.24bn and redemption of DANGCEM commercial paper of cN38bn while Outflow for the week included: Weekly Wholesale, Invisible and SME FX auction of $210mn and Bond auction debit of cN74bn.

 

We expect the CBN to resume OMO activities this week as FAAC is expected to hit the system.

Instrument

22/03/2019

29/03/2019

Change

OBB

14.25%

9.86%

-4.39%

OVN

14.83%

10.67%

-4.16%

Source: Anchoria AM Research, FMDQ OTC

 

Forex: USD/NGN

The CBN Official rate continue its upward trend last week to close at N306.95/$, a 0.02% increase while the rate in the Investors and Exporters’ FX Window rose by 0.07% to close at N360.63/$ due to the reduction in market turnover rate by 16% week-on-week to $1.21bn from $1.44bn in previous week However, Naira at the parallel market remained unchanged to close at N360.00/$ (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.

22/03/2019

29/03/2019

Change

CBN Official Rate

306.90

306.95

+0.02%

I&E FX Window

360.43

360.68

+0.07%

Everdon BDC Rate

360.00

360.00

+0.00%

Source: Anchoria AM Research, FMDQ OTC

 

Fixed Income

 

Bond: FGN

Following the surprised cut in Monetary Policy Rate (MPR) to 13.50% from 14.00% and reduction in spot rate at the Bond Market Auction conducted during the week, the Secondary Bond Market traded on a bullish note as demand was seen on most maturities especially the short tenor bonds. Average yields fell by 16bps to close the week at 14.07%.

 

The March Bond auction conducted during the week witnessed a high subscription rate of 148% with investors more interested in longest tenored bond (FEB 2028). The spot rate for all tenor issued fell to 13.50% for each Bond.

 

Secondary Market

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Source: Anchoria AM Research, FMDQ OTC

 

Treasury Bills

Due to the increase in system liquidity and absence of OMO auction during the week, the treasury bills market traded on a bullish note. Consequently, the average yield fell by 11bps to close the week at 13.55%. We are the following to affect investors sentiment this week:

 

a)     Expected FAAC inflow

b)     T-bill Primary Market Auction which is expected to hold on Wednesday, 03 April 2019

c)      Anticipated OMO auctions

 

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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