The Central Bank of Nigeria (CBN) will today auction N34bn worth of Treasury bills, and roll over existing federal government T-bill maturities.
Analysts at Zedcrest Capital Limited said upon resumption from the Salah break, despite the small volume of T-bills on offer, they expected stop rates to clear above their previous level due to the recent bearish trend in the market.
The FGN bond market closed last week on a relatively calm note, having witnessed significant sell-offs earlier in the week, which lifted yields higher by 50 basis points week-on-week.
Yields, however, dropped marginally by three basis points, following renewed demand on the long end of the curve, with the most interest witnessed on the FGN 2034 bond.
Analysts at Zedcrest said, “This week, we expect continued demand from local investors to place a slight downward pressure on yields, following expectation for a continued downtrend in the July inflation figure and coupon payment of N47bn to be paid on the FGN 2020 bond.”
They said their prediction was, however, barring a continued escalation in the global externalities witnessed earlier last week.
The T-bills market remained firmly bearish as offshore sell-offs persisted across most of the short- and mid-tenured bills.
Yields trended higher by 25bps, culminating in a 135bps week-on-week rise in the average Nigerian Treasury Bills yields.
Rates in the money market remained elevated at double digit levels, as system liquidity remained depressed due to the continued foreign exchange interventions by the CBN in the investors’ and exporters’ FX window.
The Open Buy Back and overnight rates consequently closed six per cent higher week-on-week at 12.14 per cent and 12.86 per cent, respectively.
Analysts said they expected the rates to remain elevated this week, due to expected funding pressures from a likely wholesale and retail FX interventions by the CBN.
At the interbank, the naira/dollar rate remained unchanged at N360.90/$ (spot) and N357.68/$ (retail secondary market intervention sales).
The Nigerian Autonomous Foreign Exchange rate at the I&E window rose further by 13 kobo to a six-month high of N363.44/$ due to continued profit-taking on T-bills by offshore investors.
At the parallel market, the cash rate decreased by 20 kobo to N357.80/$, while the transfer rate increased by 50 kobo to N363.00/$.