The Central Bank of Nigeria is expected to auction N216.09 billion treasury bills on Thursday while the naira reverses to below N1,600 a week after the monetary authority raised the benchmark interest rate for the 12th straight meetings.
Thursday, August 8, 2024
CBN to auction N216.09 bn NT-bills
The Central Bank of Nigeria will be auctioning N216.09 billion NT bills on Thursday.
Read also: Senate amends CBN Act, increases ways and means advances to FG from 5 to 10%
It will be auctioning N16.59 billion for the 91-day tenor, N51.34 billion for the 182-day tenor, and for the 364-day 148.15 billion.
At the last Treasury Bill auction, one-year Treasury Bill yielded 28.36 percent, the highest this year, fueled by an interest rate hike.
This was a 0.86 percent increase from 26.96 percent at the last auction and higher than 26.01 percent yields that have been since March.
The stop rate for the one-year NT-Bills hit a record 22.1 percent at this auction.
The increase in yields has further narrowed the gap in real return on the NT-Bills to a negative of 5.83 percent from a negative of 7.23 percent at the last auction.
The stop rate on the risk-free instrument is well below the July inflation rate of 34.19 percent as price pressures remained prevalent in Nigeria.
CBN announced its plan to issue N1.56 trillion in Treasury bills during the third quarter of 2024, matching the amount set to mature between June and August this year.
The amount to be offered in Q3 is 4.87 percent lower than N1.56 trillion issued in the second quarter of 2024.
Longer protests may hurt business activities
Experts have said protracted protests may likely frustrate business activities, potentially leading to a N400 billion daily loss.
Muda Yusuf, the chief executive officer of the Centre for the Promotion of Private Enterprise, said the proposed nationwide protests could inflict an estimated daily loss of N400 billion to the already fragile economy.
He said the consequences of such a huge loss for the country and the citizens would be very severe, appealing for a shorter duration in order for it not to degenerate into chaos and anarchy.
BusinessDay had reported that Nigeria’s equities market opened the new month in red, as it on Thursday, the first day of the 10-day long protest, recorded the highest daily decline.
For the fourth consecutive day, the market decreased by 0.42 percent at the close of the trading session, but on Friday, August 2, it recorded its first positive close, rising by 0.40 percent, or N219 billion.
“At the last Treasury Bill auction, one-year Treasury Bill yielded 28.36 percent, the highest this year, fueled by an interest rate hike.”
“Investors who fear the government will bow to some of the protesters’ demands sold off Nigeria’s dollar bonds on Thursday and drove down share prices,” Bloomberg says, pointing to the economic loss of the youth-led demonstration.
Read also: Is the CBN inflation strategy sustainable or destructive going forward?
Friday, August 9, 2024
NBS to release electricity report for Q2
The National Bureau of Statistics will be releasing the electricity report for the second quarter of 2024 on Friday.
In the first quarter of the year, revenue collected by electricity distribution companies (DISCOs) was N291.62 billion, a decline from N294.95 billion generated in Q4 2023 but grew on a year-on-year basis by 17.91 percent.
Electricity supply dropped to 5,769.52 gigawatt hours (Gwh) in the first three months of 2024, up from 6,432.22 Gwh in the previous quarter.
However, metered customers rose to 5.91 million in Q1 2024, indicating a growth of 5.38 percent from 5.61 million recorded in the preceding quarter. On a year-on-year basis, this grew by 11.26 percent from the figure reported in Q1 2023, which was 5.31 million, the Abuja-based statistics bureau said.
Naira recovers to less than N1,600 on more dollar inflows
The naira is gradually recovering from the recent slope to over N1,600 per US dollar days after the monetary policy hiked interest rates again by 50 basis points.
Nigeria’s naira plummeted to a four-month low despite efforts made by the Central Bank of Nigeria to make it rebound, including raising interest rates for the fourth straight meeting this year.
But the dollar was quoted at N1,570 last Thursday as against N1,608.73 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data from the FMDQ Securities Exchange Limited.
The local currency lost N5 as the dollar traded for N1,615 last Thursday from N1,610 closed on Wednesday on the parallel market, also known as the black market.
Read also: CBN in H2 2024: Continue tightening or pause after July rate hike?
“Weakening the naira raises inflation risk for the central bank as it continues to deploy various monetary tightenings to ramp up liquidity and maintain its hawkish stance,” says a leading financial expert.
Bismarck Rewane, managing director/CEO of Financial Derivatives Company Limited, has projected that the naira will make a rebound by September on consolidations from the high lending rate.
“Higher interest rates will increase savings and help moderate inflation; the naira will recover from N1700 to N1500 in September,” Rewane said while he was featured as a guest on Channels Television.
