Nigeria’s external reserves have declined by 1.44 percent to $34.90 billion as of December 21, 2020 from $35.41 billion in November 27, 2020.
The downward trend was as a result of increased dollar sales by the Central Bank of Nigeria (CBN), coupled with depressed FX earnings from oil and non-oil receipts, according to analysts at FSDH research.
However, with oil surpassing the $50.00 per barrel mark, oil receipts may be much better in the coming year. In addition, the approval of a $1.5 billion loan facility from the World Bank constitutes a significant FX inflow that will assist in pushing up FX reserves, the analysts said.
Naira on Wednesday appreciated against the dollar across the foreign exchange markets. The local currency gained N1.00k as the dollar was sold at N475 as against N476 traded on Tuesday on the black market.
At the Bureau De Change (BDC) segment of the market, Naira steadied at N475 per dollar. At the Investors and Exporters (I&E) forex window, Naira appreciated by 0.68 percent as the dollar was quoted at N392.00 as against the last close of N394.67. The analysts noted that most participants maintained bids between N385.00 and N407.25 per dollar.
The Nigeria treasury bills (NT-Bills) secondary market closed on a negative note on Wednesday with average yield across the curve increasing by 1 basis point to close at 0.42 percent as against the last close of 0.41 percent.
The average yield across medium-term maturities advanced by 8 bps, while the average yield across short-term maturities compressed by 4 bps. However, the average yield across long-term maturities closed flat at 0.52 percent.
Overnight (O/N) rate declined by 0.13 percent to close at 0.75 percent as against the last close of 0.88 percent, while the Open Buy Back (OBB) rate remained unchanged at 0.50 percent. Money market rates remained low, as the system liquidity remains buoyant with no funding pressures from the local banks, the analysts said.
In the Ope Market Operation (OMO) bills market, average yield across the curve declined by 4 bps to close at 0.47 percent from 0.51 percent on the previous day. Buying interest was seen across short-term, medium-term, and long-term maturities with average yields falling by 1 basis point, 2 bps, and 11 bps, respectively. Yields on 8 bills compressed with the 26-Oct-21 maturity bill recording the highest yield decline of 15 bps, while yields on 2 bills advanced with 25-May-21 maturity bill registering the highest yield increase of 2 bps.
At the Bond market, the Debt Management Office (DMO) has in 2020 raised N1.879 trillion from FGN bond sales via competitive bids (N1.665 trillion) and non-competitive bids (N215 billion). However, it made a repayment of maturities of about N600 billion from these gross proceeds. The DMO has built an additional cushion of N284 billion as it raised 118 percent of its domestic funding target of N1.60 trillion. Furthermore, it raised N162.556 billion from a sale of Sukuk and N3.637 billion from FGN Savings bonds’ sale.
