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Funding rates crash as system Liquidity turns positive from OMO inflows

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Thursday, November 9, 2017 6:00PM / @ZedcrestCapital 

The Bonds Market

The Bond market witnessed increased activity levels today, especially on the 2027 and 2037 bonds, as market players hunted for bargain purchase opportunities, with some intra-day profit taking activities. Average bond yields consequently retraced by 13bps to 15.05% from a 3-week high of 15.18% in the previous session. We expect some more buys by market players to take yields slightly lower tomorrow.

 
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Treasury Bills

The T-bills market was relatively quiet today with slight buys on some short tenured bills, as the CBN increased its offer of OMO bills to mop up excess inflows from maturing OMO bills. It eventually sold a total of N238million 105-day and N83billion 196-day bills, with rates maintained at 16% and 17.80% respectively. We expect the market to be relatively quiet tomorrow, with slight sell expected on some medium tenor bills.

 
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The Money Market

The OBB and OVN rates crashed to 7.17% and 7.83% from 20% levels the previous day. This was as inflows from OMO maturities eased funding pressures in the market, with market liquidity estimated to close today at N67billion long, from a negative opening figure of N82billion. We expect rates to close the week at these levels, barring any significant liquidity management action by the CBN.

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The FX Market

The CBN Official spot rate depreciated by 0.02% to N305.95/$ from its previous day rate of N305.90/$. Its external reserves is however recorded to have improved by 2.05% to $34.03billion as at 6th of November. Rates at the Investors and exporters FX window closed at N360.55/$ from N360.33/$ in the previous session. The parallel market rate however stayed unchanged at N361.20/$.

 
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For more details email research@zedcrestcapital.com or call the dealing desk via 01-6311667   

 

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