The financial market liquidity will improve as the Central Bank of Nigeria (CBN) is expected to rollover maturing government bills worth N144.8 billion at the Primary Market Auction (PMA) on Wednesday.
A breakdown of the instruments showed that N56.8 billion Open Market Operation (OMO) and N88.0 billion Nigerian treasury bills would be maturing this week.
“We expect investors to trade cautiously in anticipation of the PMA, we also expect yields to remain low as investor demand on the bills still overshadow supply,” analysts at Afrinvest Securities Limited said.
Trading in the Nigerian Treasury Bills secondary market was mildly bullish as slight demand from lost bids of about N202.3bn at the Primary Market Auction that held 2 weeks ago filtered into the market.
The week kicked off with high liquidity in the system to the tune of about N778.0bn on Monday, but this plunged to about N268.6bn on Tuesday following Cash Reserve Ratio (CRR) debits by the CBN. In the absence of inflows from maturities and Federal Account Allocation Committee (FAAC) disbursements during the week, liquidity further declined to N220.7bn on Friday, a report by Afrinvest noted.
According to the report, mild buying interests were recorded across the trading sessions and as a result, average yield dipped, albeit marginally, by 4bps W-o-W to close at 1.7%. A bulk of the demand was witnessed at the short and medium end of the curve, particularly the 27-Aug-20 (-28bps), 14-Jan-21 (-20bps) and17-Sep-20 (-15bps) maturities while the long-term instruments traded relatively flat.
At the foreign exchange market, Naira was unchanged at all market segments on Tuesday. Dollar was quoted at N385.50k, and N474 at the Investors and Exporters (I&E) forex window and the black market respectively.
The local currency was stable at N475 and N381 per dollar at the retail Bureau and official spot window respectively. The foreign exchange market opened with a marginal depreciation of N0.03k to N386.20k on Tuesday morning as against N386.17k opened with on Monday, data from FMDQ showed.
Last week, the foreign reserves of CBN experienced a fall as FX outflows continue to surpass inflows, declining by $222.14 million to $35.66 billion as of August 7, 2020. Moreover, the update of spot rate on CBN’s website from N361/$ to N379/$ is an indication of the step taken by the CBN for the unification of its exchange rate.
In the I&E FX market, Naira appreciated by 0.13 percent as the dollar was quoted at N385.50k on Monday compared to N386.00 as on the closing of the previous week. Most participants maintained bids between N359.00 and N390.00 per dollar, according to a report by FSDH research.The foreign exchange daily turnover dropped by 95.69 percent to $3.97 million on Monday from $92.22 million recorded on Friday last week, data from FMDQ revealed.
