Naira in 48-year record low at N540/$1, but stop rates clear lower for bullish bonds, T-bills

For the first time in 48 years, the Naira hit an all-time low averaging N540 to the dollar, in some cases as low as N545,  at the parallel segment of the domestic foreign exchange market, the result of continued scarcity of FX and an increasing demand for the dollar. The week opened at N532 to a dollar in the street, dipping 1.5 percent or N8 in 4 days, whereas it has depreciated 2.27 percent from the start of September till date.

Elsewhere, at the investor and exporters’ window, it recorded a 0.04 percent drop as the greenback was bought at N411.67, as against the N411.50 per dollar the previous day. Most market participants maintained their bids between the range of N400 and N412.16 per dollar respectively.

And in the money market, Overnight (O/N) rate rose by 3.67 percent to close at 13 percent as against the last close of 9.33 percent, and the Open Buy Back (OBB) rate also rose by 3.67 percent to close at 12.50 percent compared to 8.83 percent on the previous day.

At the Nigerian treasury bills secondary market, it was a positive close with average yield across the curve decreasing by 33 basis points to close at 4.82 percent from 5.15 percent on the previous day. Strong buying interest was witnessed as average yield across the long-term maturities declined by 67 basis points. However, the average yields across short-term and medium-term maturities remained unchanged at 3.16 percent and 4.31 percent, in that order. Yields on 8 bills compressed with the 28-Jul-22 maturity bill recording the highest yield decrease of 216 basis points.

Moreover, the CBN held its scheduled Primary Market Auction on Wednesday, selling Nigerian treasury bills worth N209.50 billion across the 91-day maturity at N4.94 billion, 182-day duration at N11.88 billion, and the 364-day tenor at N192.68 billion. However, the stop rates for the 91-day and 182-day closed flat at 2.50 percent and 3.50 percent, respectively. But, the stop rate for the 364-day tenor cleared higher at 7.20 percent. Meanwhile, the auction was oversubscribed by 85 percent, with bid-to-cover ratios settling at 1.16x for the 91-day tenor, 0.54x for the 182-day, and 2.17x for the 364-day tenor, respectively.

Elsewhere, in the OMO bills market on Thursday, the average yield across the curve decreased by 4 basis points to close at 6.22 percent as against the last close of 6.26 percent. High demand for bills was seen across the short-term maturities with the average yield falling by 14 basis points, while the average yield across the medium-term maturities increased by 4 basis points. However, the average yield across the long-term maturities closed flat at 6.58 percent. Buying interest was seen in the 23-Nov-21 maturity bill with a yield decrease of 217 basis points.

Meanwhile, the FGN bonds secondary market closed on a mildly positive note on Thursday as the average bond yield across the curve cleared lower by 8 basis points to close at 8.24 percent from 8.32 percent on the previous day. Average yields across the short tenor of the curve declined by 10 basis points, while the average yields across the medium tenor increased by 4 basis points. However, the average yield across the long tenor of the curve remained unchanged.