N174bn OMO auction raises money market rates
…as Bond market remains bearish
As the Nigeria’s government continued its quest to continually raise funds to finance its operations and check liquidity, the auction of N174 billion last Friday raise rates of key instruments.
Money market rates, which share relationship with liquidity position, rose significantly driven by the N174bn OMO auction conducted by CBN Friday.
However, experts have predicted that pressures may begin to build at the long end of the yield curve as investors lock in on attractive yields ahead of FG’s domestic debt issuance next year, just as market activities are billed to to remain the same in the near term following MPC’s decision to keep monetary parameters unchanged.
Meanwhile, following th e OMO auction, Friday, Overnight (OV) and Open Buy Back (OBB) rates increased by +2063bps and +1900bps respectively to close at 32.58 per cent and 30.83 per cent.
While, NIBOR rates were not available as at the time of filling this report, at the OMO’s auction, the Central Bank of Nigeria (CBN), sold N140m for 90-day bill at a stop rate of 15.00 per cent and .N173bn for 209-day bill at a stop rate of 17.65 per cent.
Also, the bond market was generally bearish, with the 5yr bond declining 4bps to close at 14.51 per cent. So did the yield on the 7yr and 10yr benchmark bond remain flat to close 14.73 per cent and 14.81 per cent, respectively.
The Naira appreciated +0.01 per cent to close at N360.25 against the USD. Nonetheless, it shed -0.26% and -0.61 per cent to close at N478.84 and N428.05 against the GBP and EUR respectively at the I&E FX window.
At the parallel market, the NGN closed flat against USD and GBP at N364 and N475. Similarly, it closed unchanged against the EUR at N425.
On the projected trend in forex market, Investment One analysts said: “In our opinion, we expect the recent Eurobond ($3bn) issued and the accretion in foreign reserves should continue to support the local currency in the FX market
Stories by Bonny Amadi
