Naira takes hit in street at N520/$1, but T-bills yields go flat amid rates increase

The Nigerian Naira sank further by N5 on Thursday to close at N520 to the dollar after opening the day’s trading at N515 for the greenback at the parallel market. The local currency thus continues to fight for stability in a bid to arrive at its fair value after trading at N517 per dollar mid-day on Thursday as a reactive development from CBN’s recent decision against some trading platforms in Nigeria.

On the other hand, at the I&E FX market, Naira appreciated by 0.02 percent as the dollar was quoted at N411.67 as against the last close of N411.75, with most market participants maintaining bids at between N400 and N413 to the dollar.

A peep into the money market trading on Thursday shows that Overnight (O/N) rate increased by 0.46 percent to close at 18.33 percent compared to the last close of 17.87 percent, while the Open Buy Back (OBB) rate also increased by 0.17 percent to close at 17.67 percent compared to 17.50 percent on the previous day.

In the Nigerian Treasury Bills secondary market, it was a flat outing from the previous session with the average yields across the curve remaining unchanged at 4.58 percent. Meanwhile, the average yields across short-term, medium-term, and long-term maturities closed flat at 3.33 percent, 4.30 percent and 5.57 percent, respectively.

Furthermore, in the OMO bills market, the average yield across the curve decreased by 162 basis points to close at 5.95 percent as against the last close of 7.67 percent. Heavy buying interest was seen across short-term, medium-term, and long-term maturities with the average yields falling by 176 basis points, 133 basis points, and 185 basis points, respectively. Also, the returns on 21 bills compressed with the 31-Aug-21 maturity bill recording the highest yield decrease of 227 basis points.

It was a bullish performance at the FGN bonds secondary market on Thursday as the average bond yield across the curve cleared lower by 10 basis points to close at 8.53 percent, from 8.63 percent on the previous day. Average yields across the short tenor, medium tenor, and long tenor of the curve, declined by seven basis points, 24 basis points, and eight basis points, respectively. The 23-FEB-2028 maturity bond was the best performer with a decline in yield of 39 basis points, while the 27-MAR-2050 maturity bond was the worst performer with an increase in yield of 3 basis points.

In other segments, the FGN bond auction for August 2021 was oversubscribed by 140 percent or N360.02 billion as the auction witnessed healthy demand across all the tenors with bid-to-cover ratios settling at 1.55x for the 10-year, 2.10x  for the 20-year, and 3.55x for the 30-year. consequently, the DMO raised bonds worth N260.09 billion, which was 73.39 percent more than the amount offered across the 10-year (N64.25 billion), 20-year (N91.03 billion), and 30-year (N104.81 billion) tenors at marginal rates of 11.60 percent (-75 basis points), 12.75 percent (-40 basis points), and 12.80 percent (-45 basis points), respectively.