The Central Bank of Nigeria (CBN) intervention across Foreign Exchange (FX) market segments increased in October, with total intervention sales rising by 25 percent to $1.9 billion from $1.5 billion in September 2020.
A report by FSDH research showed that the CBN sold $540 million to the SMEs, Invisibles and SMIS (retail and wholesale) segments as compared to $400 million in September 2020.
While the CBN remained a net supplier of FX to the tune of $259 million in the Investors and Exporters (I&E) forex window following an increase in outflows by 22 percent to $896 million.
At the I&E FX market, Naira depreciated by 0.04 percent as the dollar was quoted at N385.83 on Wednesday as against the last close of N385.67 on Tuesday. Analysts at FSDH research said most participants maintained bids between N380.00 and N393.57 per dollar.
Naira depreciated by average of N2.5k as the dollar was trading at N467 on Thursday as against the rate between N464 and N465 traded on the previous day on the black market.
It also weakened by N2 at the Bureau De Change (BDC) segment of the foreign exchange market as the dollar traded at N464 on Thursday as against N462 traded on the previous day.
The foreign exchange daily turnover increased 45.48 percent to $205.05 million on Wednesday compared with $140.95 million recorded on Tuesday, data from the FMDQ revealed.
At the Primary Market Auction held on Wednesday, the CBN offered NT-Bills worth N130.60 billion across the 91-day (N20.37 billion), 182-day (N19.16 billion), and 364-day (N91.07 billion) tenors.
“We expect trading activities to pick up towards the end of the week as investors seek to place their unmet bids into the NT-Bills secondary market. Furthermore, expected NT-Bills maturities worth N150.60 billion could spur demand, exerting further pressure on yields, ” analysts at FSDH research said.
The Nigerian treasury bills secondary market closed on a positive note on Wednesday, with the average yield across the curve declining by 5 bps to close at 0.46 percent from 0.51 percent on the previous day. Average yields across medium-term and long-term maturities compressed by 1 basis point and 10 bps, respectively, while the average yield across short-term maturities closed flat at 0.36 percent. Maximum buying interest was witnessed in the NTB 28-Oct-21 (-19 bps), NTB 16-Sep-21 (-16 bps), and NTB 9-Sep-21 (-15 bps) maturity bills.
The Overnight (O/N) rate declined by 0.14 percent to close at 1.05 percent from 1.19 percent on the previous day, and the Open Buy Back (OBB) rate also declined by 0.11 percent to close at 0.64 percent as against the last close of 0.75 percent.
“We expect the money market rates to remain at current low levels supported by the ample market liquidity, barring any significant funding needs by banks,” the analysts said.
In the OMO bills market, the average yield across the curve declined by 4 bps to close at 0.21 percent as against the last close of 0.25 percent. Buying interest was seen across short-term maturities with the average yield falling by 9 bps.
However, average yields across medium-term and long-term maturities remained unchanged at 0.23 percent and 0.27 percent, respectively. Yields on 6 bills compressed with the 2-Feb-21 maturity bill recording the highest yield decline of 26 bps, while yields on 19 bills remained unchanged, the report stated.