Across the foreign exchange market, the Naira traded flat against the Dollar at N394.13 at the Investors & Exporters Foreign Exchange (I&E FX) window in its week-on-week (wow) performance but weakened by 0.6per cent to N480.00 against the Dollars in the parallel market.
At the I&E window, total turnover (as of 28th January 2021) decreased by 9.5per cent Week-Till-Date (WTD) to $237.42 million, with most trades consummated within the N385.00 – 396.00/$ band.
In the Forwards market, the rate weakened across the 1-month (-0.4per cent to N399.85/dollar) contract, 3-month (-0.4per cent to N407.41/dollar), 6-month (-0.6per cent to N418.73/dollar) and 1-year (-0.3per cent to N436.65/dollar) contracts.
The overnight (OVN) rate expanded by 50basis points wow, to 11.0per cent, as outflows for the FG’s statutory remittances (c. N200 billion) and CBN’s weekly FX and OMO (N145.00 billion) auction debits outweighed inflows from OMO maturities (N190.15 billion) and FGN bond coupon payments (N87.29 billion).
Analysts at Cordros capital said, “In line with our expectation, bearish sentiments pervaded the Treasury bills secondary market as average yield across all instruments expanded by 63bps to 1.4per cent.
“The market was pressured by the tight liquidity in the system, as participants sold off on positions to fund their cash obligations.
“Furthermore, trading bias was tilted to the negative following a couple of mismatched trades from traders who remained firmly offered on shorter-dated bills against the longest dated instruments that buyers preferred.
“At the OMO segment, offshore investors continued to sell off bills in anticipation of higher yields at the primary market.
Thus, the average yield in the segment expanded by 74basis points to 1.7 per cent. In the same vein, the average yield at the NTB segment expanded by 53basis points to 1.1 per cent, as the market reacted to the outcome of the NTB auction on Wednesday.
“At the auction, the CBN offered bills worth N187.29 billion with allotments of N11.39 billion of the 91-day, N47.48 billion of the 182-day and N123.11 billion of the 364-day – at respective stop rates of 0.55 (previously 0.50 per cent), 1.30 per cent (previously 1.00 per cent), and 2.00 per cent (previously 1.50 per cent).
“Amidst the persisting bearish sentiments, we expect the gradual uptick in secondary market yields to continue as investors clamour for higher yields in the space”, analysts at Cordros capital said.