The nation’s currency, the naira, is expected to strengthen this week following anticipated month-end dollar sales by oil majors, analysts at Cowry Assets Management Limited have said.
The naira last week strengthened at the alternative markets. At the inter-bank market, the naira/USD exchange rate fell by 0.26% to N163.23/$ following sales of USD37 million by local unit of oil multinational, Chevron, to local lenders. Also, the local currency appreciated at the parallel (or ‘black’) market by 0.30% (or N0.50) to N167.00/$1. However, the naira/USD exchange rate closed steady at the bureau de change at N165.50/$1. At the official market, central bank sold USD660.34 million (or N102.83 billion) to end users at its Retail Dutch Auction as against USD595.95 million (or N92.81 billion) sold last week.
On the other hand, interbank rates are expected to increase as funds are warehoused by banks for foreign exchange auction.
The CBN last week auctioned treasury bills worth N168.30 billion via primary market auctions, viz: 91-day bills worth N33.27 billion; 182-day bills worth N65.03 billion; and 364-day bills worth N70 billion while treasury bills worth the same amount matured. The 91-day bill marginal rate fell to 9.9% (from 10% in the previous auction); the 182-day bill marginal rate dipped 7bps to 10.38% (from 10.45%); while the 364-day bill marginal rate declined to 10.39% (from 10.49%).
The CBN last week auctioned treasury bills worth N168.30 billion via primary market auctions, viz: 91-day bills worth N33.27 billion; 182-day bills worth N65.03 billion; and 364-day bills worth N70 billion while treasury bills worth the same amount matured. The 91-day bill marginal rate fell to 9.9% (from 10% in the previous auction); the 182-day bill marginal rate dipped 7bps to 10.38% (from 10.45%); while the 364-day bill marginal rate declined to 10.39% (from 10.49%).
Meanwhile, Nigerian Inter-Bank Offered Rates (NIBOR) decreased across all placement tenors as financial system liquidity eased amid inflows from FAAC disbursements worth N683.30 billion as well as matured treasury bills.
The shorter term tenors – the overnight and 1 month rate – fell to 10.61% and 12.21% ( from 10.63% and 12.23%), respectively. Also, the longer term tenors – the 3 months and 6 months – declined to 13.23% and 14.05%, respectively.
A report by Cowry Assets states that this week CBN will retire 7-year, 9.20% FGN June 2014 note worth N45 billion on Sunday, June 29, 2014. At the OTC market segment bond prices are expected to fall (and yields to rise) as investors take profit amid anticipated strain in financial system liquidity.
At the over the counter market last week, Federal Government bond prices appreciated and yields declined for most maturities amid bargain hunting activities. The 10-year, 16.39% FGN January 2022 debt gained N0.35 (yield decreased to 12.14%); the 7-year, 16.00% FGN June 2019 bond firmed by N0.85 (yield declined to 11.61%); while the 5-year, 15.10% FGN April 2017 paper increased by N0.10 (yield decreased to 11.58%). However, the 3-year, 13.05% FGN August 2016 bond moderated by N0.15 (yield increased to 11.58%) while the 20-year, 10.00% FGN July 2030 bond closed steady.
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