Bad to worse! Naira tumbles to N562/$1; T-bills, OMO, bonds bearish as stop rates crash

The Naira closed Wednesday’s trading session losing N5 against the dollar as it went from N557/$1 on Tuesday to a new historic low of N562/$1 in street trading resulting from continued FX pressure and scarcity in the currency market.

Meanwhile, at the I&E FX market, it closed flat at N412.06 to the greenback as most market participants maintained bids at between N400 and N414.90 per dollar.

And at the money market on Wednesday, the Overnight (O/N) rate decreased by 0.95 percent to close at 13.55 percent due to the absence of a significant funding pressure as against the last close of 14.50 percent, and the Open Buy Back (OBB) rate slowed by 1 percent to close at 13 percent compared to 14 percent on the previous day as a result of ease in liquidity pressure.

In the Nigerian Treasury Bills secondary market, it was a negative close as the average yield across the curve increased by 52 basis points to close at 5.48 percent from 4.96 percent on the previous day due to persistent sell-offs on long-dated treasury bills. Average yields across short-term, medium-term and long-term maturities expanded by 97 basis points, 60 basis points, and 27 basis points, respectively.

Moreover, at the Primary Market Auction held by the CBN on Wednesday, the apex bank offered bills worth N155.88 billion across 91-day (N1.61 billion), 182-day (N5.91 billion), and 364-day (N148.36 billion) tenors.

In the OMO bills market, trading activity was muted on the notes as the average yield across the curve decreased by 17 basis points to close at 6.14 percent as against the last close of 6.31 percent. Yield across the long-term maturities declined by 361 basis points as heavy buying interest was seen in the 16-Aug-22 maturity bill (-361 basis points).

However, the average yields across short-term and medium-term maturities closed flat at 5.66 percent and 6.39 percent, respectively. Thus, total value traded stayed around N8 billion with most flows going into the August NTBs.

At the FGN bonds secondary market, it was a bearish outing as market players remained on the sidelines ahead of the outcome of Wednesday’s N156 billion NTB auction. While sentiments remain largely bearish, the momentum of selloffs pared as investors cherry picked attractive offers across long dated bonds with the average bond yield across the curve cleared higher by 33 basis points to close at 8.80 percent from 8.47 percent on the previous day.

Also, the average yields across the short tenor and long tenor of the curve expanded by 42 basis points and 21 basis points, respectively. However, the average yields across the medium tenor of the curve declined by 3 basis points while the value traded stayed calm at N20 billion with most flows on the 2050 bonds.

Meanwhile, the DMO released its FGN Bonds offer circular for September 2021 Primary Market Auction, indicating plans to offer FGN bonds worth N150 billion through re-opening of 10-year (N50 billion), 20-year (N50 billion), and 30-year (N50 billion) tenors. The bond auction is scheduled to be held on September 22, with a settlement on September 24.