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Inter-Bank FX Rate hits Ytd High of N306.00 Per $ Amid CBN’s wholesale interventions

Proshare

Monday, February 19, 2018/6.00pm/Zedcrest Capital

***Reps demand N800bn supplementary budget for fuel marketers***
 

KEY INDICATORS

Inflation

15.13%

Declined by 0.24% in January from 15.37% in December 2017

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting of November 2017

External Reserves

$41.54billion

Accreted 1.71% as at 14 February from $41.47bn as at 13 February 2018

Brent Crude

$65.29pb

Rose by 0.71% from $64.83pb on 16 February 2018

 
Bonds

The bond market was scantily traded in today’s session, with slight sell witnessed on some long tenured bonds. This consequently lifted yields marginally upwards by c.4bps across the curve. We expect another quiet trading session tomorrow, as market players position themselves ahead of the FGN Bond auction slated for Wednesday, with N50bn of the 2021 and N50bn of a 2028 (new issue) bond on offer.  

Benchmark FGN Bond Yields

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

14.07

14.00

0.08

15.54 13-Feb-20

14.10

14.03

0.06

14.50 15-Jul-21

13.71

13.64

0.05

16.39 27-Jan-22

13.59

13.52

(0.01)

14.20 14-Mar-24

13.70

13.63

0.03

12.50 22-Jan-26

13.76

13.69

0.00

16.29 17-Mar-27

13.82

13.75

0.04

12.15 18-Jul-34

13.46

13.39

0.02

12.40 18-Mar-36

13.40

13.33

0.04

16.25 18-Apr-37

13.42

13.35

0.08

 

 

 

 

 

 

 

 

 






Source: Zedcrest Dealing Desk 


Treasury Bills
The T-bills market traded on a relatively flat note, even as average yields stayed unchanged at c.15.51%. This came on the backdrop of a further squeeze in system liquidity coming from the Wholesale FX sales by the CBN. The CBN issued a No-sale OMO result despite moderate subscriptions for the medium tenured bill offered. We expect the market to remain relatively stable at these levels tomorrow, due to the tight system liquidity. This is however barring a further hold on OMO issuance which could fuel some bullish sentiments amongst market players.

Benchmark Treasury Bills Rates

Description

Bid (%)

Offer (%)

Day Change (%)

5-Apr-18

15.35

15.20

0.05

3-May-18

14.80

14.65

0.00

14-Jun-18

14.60

14.45

(0.10)

5-Jul-18

14.40

14.25

(0.10)

2-Aug-18

14.35

13.45

0.00

13-Sep-18

14.65

14.50

0.00

4-Oct-18

14.55

14.40

(0.05)

1-Nov-18

14.50

14.35

0.00

3-Jan-19

13.75

13.60

0.00

14-Feb-19

13.65

13.50

0.00

Source: Zedcrest Dealing Desk

OMO Auction Result

Tenor

Rate (%)

Offer (NBn)

Sub (N'bn)

Sale (N'bn)

101 day

Nil

10.00

0.002

Nil

262 day

Nil

50.00

46.26

Nil

 

 Money Market
The OBB and OVN rates rose to 25.17% and 26.67% respectively. This came on the backdrop of the squeeze in Naira liquidity coming from the FX interventions by the CBN. System Liquidity is consequently estimated to close at c.N40bn positive from a c.N100bn opening figure. We expect rates to remain elevated at these levels, as there are no significant inflows expected into the system tomorrow.  

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

25.17

18.17

Overnight (O/N)

26.67

19.50

 

 

 

 


 

Source: FMDQ, Zedcrest Research


FX Market
The CBN Official spot rate depreciated by 0.02% to N306.00/$, marking its highest level recorded this year. This came amid the CBN’s usual Intervention of c.$210mn in the wholesale, SME and invisibles segment of the market.

The spot rate in the Investors and Exporters’ FX Window appreciated by 0.02% to close at N360.28/$ from N360.36/$ in the previous session.

Rates in the Unofficial market appreciated significantly by 0.14% to N360.80/$, consequently marking its lowest level for the year and its closest level to the I&E market rate. 

FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.00

305.95

CBN SMIS

330.00

330.00

I&E FX Window

360.28

360.36

Parallel Market

360.80

361.20

Source: CBN, FMDQ, REXEL BDC   

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