Lending rates to moderate on back of N67.65bn TBills

The Nigeria interbank lending rates are expected to remain stable next week as N67.65 billion mature Treasury Bills hit the financial system, analysts have said.

This is coming as analysts expect the naira dollar exchange rate stability to also continue in the week. Last week, the Central Bank of Nigeria (CBN) auctioned T-bills worth N229.85 billion via the primary market. The breakdown of the auction shows that 91-day bills were worth N10.25 billion, 182-day bills worth N26.60 billion and 364-day bills worth N193.00 billion. The respective stop rates fell to 12.10 percent (from 12.55%), 13.75 percent (from 13.93%) and 13.79 percent (from 14.30%) according to analysts at Cowry Asset Management Limited.

Also, T-Bills worth N237.06 billion were sold via Open Market Operations (OMO). The outflows were partly offset by inflows worth N263.40 billion in matured treasury bills. Consequently, the Nigerian Inter-bank Offered Rate (NIBOR) for overnight funds and 1-month tenor buckets rose w-o-w to 18.3 percent (from 9.21%) and 14.54 percent (from 14.49%) respectively. However, 3 month and 6-month tenor buckets fell 14.94 percent (from 15.87%) and 15.96 percent (from 17.38%) respectively.

At the foreign exchange market, the local currency last week strengthened against the U.S. dollar at the Investors & Exporters Forex Window (I&E FXW) by 0.09 percent to N360.10/USD week-on-week (w-o-w) amid the injections by the Central Bank of Nigeria (CBN) worth USD210 million into the foreign exchange market of which USD 100 million was allocated to Wholesale (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for Invisibles. However, the Naira closed flat against the U.S. dollar at both the Bureau De Change and the interbank foreign exchange market segments at N361/USD and N330/USD respectively.

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“This week, we expect sustained stability in the naira as global crude oil prices remain upbeat, which should result in the further build-up in foreign reserve”, the analysts said.

However, all dated forward contracts at the interbank over-the-counter (OTC) segment appreciated on the sustained increase in the foreign exchange reserves – spot rate, 1 month, 2 months, 3 months and 6 months contracts appreciated week-of-week by 0.03 percent, 0.08 percent, 0.16 percent, 0.31 percent and 0.30 percent to close at N305.70/USD, N363.93/USD, N367.82/USD, N371.75/USD, and 386.50/USD respectively.

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