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CBN Calms Market with c.N277bn OMO Sales


Thursday, March 01, 2018 6:40 PM /Zedcrest Capital

***Total Capital Imported rises to $5.38bn in Q4 2017*** - NBS

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The bond market opened on a slightly bullish note, as market players anticipated favorable client demand due to surplus system liquidity and unsatisfied bids on the 1yr PMA bill in the previous session. A significant OMO offer by the CBN (N400bn) however calmed the bullish bias, with some sell after the OMO announcement reversing yields to c.1bp below their previous closing levels. We expect the market to close the week on a relatively calm note, as clients demand for bonds remain very weak.

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Treasury Bills

The T-bills market traded on a slightly bullish note, following increased inflows from OMO T - bill maturities (N109bn) and net PMA repayments (N130bn) into the system. The CBN however intervened with a total sale of c.N277bn of a 259-day bill, consequently calming what would have been an aggressively bullish session.  We expect a relatively calm trading session tomorrow, as market players anticipate funding for retail FX sales and a likely OMO auction by the CBN.


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Money Market

The OBB and OVN rates declined to 3.08% and 3.42% respectively, as inflows from OMO T-bill maturities and net PMA repayments helped to bolster system liquidity to c.N658bn long, having also accounted for debits for c.N277bn OMO auction sales. We expect rates to trend higher tomorrow, due to expected funding for retail FX and OMO auction sales.

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FX Market

The CBN Official spot rate appreciated slightly by 0.02% to N305.85/$ from its previous rate of N305.90/$. Its external reserves is also recorded to have improved by 1.67% to $42.35bn as of 27 February.

The spot rate in the Investors and Exporters’ FX Window depreciated further by 0.03% to close at N360.51/$ from N360.41/$ in the previous session.

Rates in the Unofficial market however appreciated slightly by 0.03% to N360.90/$ from its previous rate of N361.00/$.

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