Nigeria’s financial market liquidity would boost up next week, following the expected inflow from Open Market Operation (OMO) worth N567.7 billion.
Financial system liquidity stood at N194.7 billion on Monday, down from N908.1 billion at the close of last week, the interbank rates -Open BuyBack (OBB) and Overnight (OVN) – opened the week lower at 3.0 percent and 4.0 percent w/w respectively from the close of 10.3 percent and 11.5 percent, the previous week.
By Thursday, the rates declined significantly to 1.0 percent and 1.8 percent as inflows from maturing OMO instruments entered the system. By the close of the week, the rates stood at 1.0 percent and 1.6 percent as system liquidity closed at N335.1billion, according to a report by Afrinvest Securities Limited.
To absorb liquidity from maturing treasury bills, the CBN offered a total of N114.0 billion across the short, mid and long-tenor instruments at the primary market auction on Wednesday. The instruments were oversubscribed at an aggregate bid-to-cover of 3.1x as subscriptions totaled N348.3 billion and the highest demand was recorded at the longest tenor with bid-tocover ratio of 3.7x.
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Instruments worth N134.0 billion were sold across the three maturities at marginal rates of 1.08 percent, 1.49 percent and 2.80 percent respectively, slight declines from respective rates of 1.09 percent, 1.50 percent and.3.05 percent recorded at the previous auction.
In the secondary market, performance turned bullish as average yield across tenors declined 22bps w/w to 1.7 percent from 1.9 percent last week. Significant buying interest was recorded at the mid end of the curve as yields fell by 48bps to 1.6 percent. Yields also declined at the long end by 32bps to 2.4 percent while short-term yields rose by 13bps to 1.2 percent.
“In the coming week, we expect inflows of N567.7 billion from maturing OMO bills to boost system liquidity and pressure yields in the secondary market. However, we believe CBN would resume OMO auctions to keep rates and system liquidity in check,” analysts at Afrinvest said.
Nigeria’s currency gained N2 against the dollar at weekend exchanging for N460 compared to N463 traded on Friday on the black. Naira remained stable as the dollar was traded at N465 at the Bureau De Change segment of the foreign exchange market.
The 5,000 BDCS who funded their accounts on Wednesday receive disbursement on Friday after the holiday.
At the Investors and Exporters (I&E) forex window on Friday, naira appreciated by 0.05 percent as the dollar was quoted at N385.80 against the last close of N386.00. Analysts at FSDH Research said most participants maintained bids between N380.00 and N386.00 per dollar. The CBN is still committed to its weekly FX sales to BDCS, which is expected to inject more liquidity to the FX market’s retail segment.
