Analysts see foreign portfolio investors’ interest in T-bills healthy for naira

The Nigerian Treasury Bills programme for third quarter 2014 as released by the Central Bank of Nigeria (CBN) will attract inflows from foreign portfolio investors which will help to strengthen the local currency this week, analysts have said.
In the treasury bill programme, the CBN will auction N33.2 billion for 91 days, N65 billion for 182 days and N70 billion for one year on June 19, 2014.

“We expect the naira to appreciate on the back of nairacommitment of the monetary authority to defend the naira in addition to anticipated dollar inflows from foreign portfolio investors as they participate in the scheduled treasury bills auction”, analysts at Cowry Asset Management Limited said.

Last week, the central bank sold USD595.95 million (or N92.81 billion) to end users at the Retail Dutch Auction. Consequently, the official USD/naira rates remained steady at N155.73/$1. At the inter-bank market, the naira/USD exchange rate fell by 0.47% to N164.50/$1 despite anticipated dollar sales by state-controlled Nigerian National Petroleum Company (NNPC). While the local currency strengthened at the bureau de change by 0.60% (or N1.00) to N166.50/$1, it depreciated at the parallel (or ‘black’) market by 0.90% (or N1.50) to N167.50/$1.

Inter-bank rates on the other hand are expected to moderate this week on the back of anticipated liquidity boost due to FAAC disbursements into the financial system.

The CBN will auction treasury bills worth N168.30 billion via OMO, viz: 91-day bills worth N33.27 billion; 182-day bills worth N65.03 billion; and 364-day bills worth N70 billion. However, an equivalent amount of treasury bills worth N168.30 billion will mature, viz 91-day bills worth N33.27 billion; 182-day bills worth N65.03 billion; and 364-day bills worth N70 billion.
Last week, the Nigerian Inter-Bank Offered Rates (NIBOR) increased for most placement tenors as financial system liquidity tightened amid foreign exchange and FGN bond auctions.

The overnight rate rose the highest by 0.54 ppt to 11.13% (from 10.58%), while the 3 months and 6 months tenors rose to 13.22% and 14.17% from 12.89% and 13.95%, respectively. However, the 1 month rate dipped 0.07 ppt to 11.96% from 12.03%.