Money Market Rate Increased As Overnight Rate Rose to 20.25%

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Monday, February 25, 2019  12:39 PM / Anchoria AM Research

 

Money Market

The money market rate increased last week as the Overnight rate (OVN) and Open Buy Back (OBB) rose to 20.25% and 15.83% respectively. Consequently, the average money market rate rose by 2.88% to settle at 19.54% due to the reduction in the System liquidity to negative figure of cN180bn from cN330bn in the previous week. Major outflow for the week included: Bond Sales of cN150bn, Weekly Wholesale, Invisible and SME FX auction of $210mn, OMO Sale of cN688bn, while inflow for the week included: OMO maturity of cN578bn. 

We expect the rates to close higher this week with the expectation of OMO auctions and T-bills auction barring any significant inflow during the week.

Instrument

15/02/2019

22/02/2019

Change

OBB

15.83%

18.83%

+3.00%

OVN

17.50%

20.25%

+2.75%

Source: Anchoria AM Research, FMDQ OTC

 

Forex: USD/NGN

The CBN Official rate grew by 0.02% to close at N306.80/$ while the rate in the Investors and Exporters’ FX Window fell by 0.04% to close at N361.49/$. We observed an increase in the market turnover in the I&E Window as market turnover hit a one month high on the back of increased FPI inflows. In similar vein, Naira at the parallel market appreciated marginally by 0.28% to close at N361.00/$ (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.

15/02/2019

22/02/2019

Change

CBN Official Rate

306.75

306.80

+0.02%

I&E FX Window

361.65

361.49

-0.04%

Everdon BDC Rate

362.00

361.00

-0.28%

Source: Anchoria AM Research, FMDQ OTC


Commodities

The Brent Crude Oil and WTI Crude Oil rose by 1.31% and 3.00% to close at $67.12 and $57.26 per barrel respectively due to the following:

  • Speculation by traders that the U.S. and China are moving closer to a trade deal.
  • Ongoing evidence of declines in world-wide output capped price

 

Fixed Income

Bond: FGN

After 4 consecutive weeks of bullish run in the Bond Market, the market closed on a bearish note last week as bearish stands were witnessed at the early part of the week due to reactions from the election postponement and limited bond market activities ahead of Wednesday Bond Auction, notable amongst them include 2036s (+30bps) and 2022s (+27bps). However, after the auction the market witnessed increased demand most especially on 2028s bond. Average yields rose by 4bps to close the week at 14.69%. The Bond auction conducted during the week witnessed an oversubscription as to marginal rate trended lower than the previous rate. 

We expect the market to be bullish this week due to increase FPI and expected coupon payment barring any post-election violence.

 

Secondary Market

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Source: Anchoria AM Research, FMDQ OTC

 

Treasury Bills

Despite a reduction in system liquidity during the week, the treasury bills market traded on a bullish note. Consequently, the average yield fell by 41bps to close the week at 14.34%.

 

Secondary Market

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Source: Anchoria AM Research, FMDQ OTC 

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