Average Money Market Rate Rose By 6.61% To Settle At 11.15% Due To Constraint In System Liquidity

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Monday, June 10, 2019  / 01:35PM / By Anchoria AM Research

 

Money Market

The average money market rate rose by 6.61% to settle at 11.15% from 4.54% in the previous week due to contraction in system liquidity during the week, which is estimated to have closed the week at cN270bn from cN410bn in the previous week as the Central Bank of Nigeria (CBN) issued OMO two times during a 3-day holiday shortened week. 

The Overnight rate (OVN) and Open Buy Back (OBB) rose to 11.43% and 10.86% from 4.93% and 4.14% respectively in the previous week. Major Outflow for the week included: OMO Sales of cN157.98bn on Thursday and cN317.94bn on Monday; Weekly Wholesale, Invisible and SME FX auction of $210mn and bi-weekly FX auction on Friday, while major Inflow for the week included: OMO Maturity of cN177bn. 

Barring any significant inflow coupled with expected OMO and PMA T-bill sales during the week, we expect the rate to close higher.


Instrument

31/05/2019

07/06/2019

Change

OBB

4.14%

10.86%

+6.72%

OVN

4.93%

11.43%

+6.50%

Source: Anchoria AM Research, FMDQ OTC

 

Forex: USD/NGN

The foreign market remained relatively stable last week as the CBN Official Rate and the rate at parallel market remained unchanged to close at N306.95/$ and N361/$ respectively while the rate in the Investors and Exporters’ FX window rose marginally by 1 kobo. 

On an average, market turnover closed at $243 million during the week from $123 billion in previous week. This represents 97% increase in average market turnover. 

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.


31/05/2019

07/06/2019

Change

CBN Official Rate

306.95

306.95

+0.00%

I&E FX Window

360.74

360.75

+0.00%

Everdon BDC Rate

361.00

361.00

+0.00%

Source: Anchoria AM Research, FMDQ OTC

 

Commodities

Instrument

31/05/2019

07/06/2019

Change

BRENT OIL

               64.49

          63.29

-1.86%

WTI OIL

               53.50

          53.99

+0.92%

 

Fixed Income

Bond: FGN

The Bond Market traded on a weak note last week with the average yields trended downward by 39bps to close the week at 14.24%. This was due to uncertainty in the global space as trade war between US and China continued. 

The Federal Government of Nigeria through the Debt Management Office (DMO) is set to raise N15bn through the issuance of a green bond this week. The instrument will be offered at a coupon rate of between 14.40% and 14.50%, with a seven (7) year tenor. 

We expect the bond secondary market to trade cautiously this week as investors remained fixated on global trade tension and Fed outcome which might result in reduction in Fed rate.


Secondary Market

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Source: Anchoria AM Research, FMDQ OTC

 

Treasury Bills

With the resumption of CBN mopping exercise during the week, the secondary treasury bill market closed on a bearish note. The average yield rose by 70bps to close at 12.88% from 12.17% in the previous week.


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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