ICYMI: Unrelenting FX pressure drove Naira to new N530/$1 low on bullish bonds, T-bills Thursday

The Nigerian Naira fell 0.38 percent day on day to N530 on Thursday in the parallel market reaching an all-time low owing to the paucity of dollar liquidity in the foreign exchange market continuing an unrelenting pressure on the local currency.

Accordingly, at the investors’ and exporters’ window (I&EW), the Naira depreciated by 0.04 percent as the dollar was quoted at N411.67 as against the last close of N411.50. Most participants maintained bids at between N400 and N413 per dollar.

As a result of the absence of significant funding pressure in the money market, the Overnight (O/N) rate decreased by 0.17 percent to close at 4.83 percent as against the last close of 5 percent, and the Open Buy Back (OBB) rate also decreased by 0.17 percent to close at 4.33 percent compared to 4.50 percent on the previous day.

NT-Bills secondary market closed on a positive note following significant demand for short and mid-dated bills. The bullish sentiment resulted in the average yield across the curve decreasing by 6 basis points to close at 4.52 percent from 4.58 percent on the previous day.

Average yields across the short-term and medium-term maturities declined by 3 basis points and 19 basis points, respectively. However, the average yield across the long-term maturities remained unchanged at 6.04 percent. Yields on 6 bills compressed with the 13-Jan-22 maturity bill recording the highest yield decrease of 85 basis points, while yields on 13 bills remained unchanged.

Elsewhere, in the OMO bills market, the average yield across the curve closed flat at 6.12 percent due to sell-offs at the intermediate segment matching with the buying interest at the long end of the curve. Thus, average yields across short-term, medium-term, and long-term maturities closed flat at 5.56 percent, 6.40 percent, and 6.61 percent, respectively. OMO 1-Mar-22 (-18 basis points) and OMO 8-Mar-22 (-9 basis points) maturity bills witnessed buying interest, while OMO 25-Jan-22 (+17 basis points) and OMO 18-Jan-22 (+2 basis points) maturity bills witnessed selling pressure.

FGN bonds secondary market closed on a mildly positive note on Thursday, as the average bond yield across the curve cleared lower by 2 basis points to close at 8.30 percent from 8.32 percent on the previous day. Average yields across the short tenor, medium tenor, and long tenor of the curve declined by 1 basis point, 7 basis points, and 1 basis point, respectively. The 27-MAR-2035 maturity bond was the best performer with a decline in yield of 35 basis points, while the 24-JUL-2045 maturity bond was the worst performer with an increase in yield of 41 basis points.