The Central Bank of Nigeria (CBN) will this week conduct its bi-weekly treasury bills auction with total offer of N229.1 billion to offset maturing bills of the same amount.
In addition, the central bank is expected to float open market operations (OMO) auctions to keep financial system liquidity tight.
Afrinvest West Africa Limited stated in a report at the weekend that despite repeated OMO auctions, money market rates eased last week against the backdrop of an OMO repayment and improved system liquidity. The CBN conducted OMO auctions on all trading sessions but for Monday.
Despite this, system liquidity during the week remained in the positive region save for Wednesday which had a negative balance of N53 billion. Money market rates – Open Buy Back (OBB) and overnight (OVN) – were at first elevated at the start of the week (relative to preceding Friday’s close of 14 per cent and 14.9 per cent respectively). But both rates closed at five per cent and 5.8 per cent respectively.
Despite the MPC’s decision to retain rates at current levels, performance of the secondary treasury bills market was bearish last week as average yield rose on four of five sessions.
On the other hand, foreign exchange rate at the official market remained pegged within a range of N305.70/$1 – N305.75/$1 during the week, closing at N305.70/$1.
At the parallel market, rate appreciated from last week’s close of N366.00/$1 to touch a 2017 high of N364/$1 on Wednesday before closing the week at N365/$1.
Meanwhile, at the NAFEX segment, a total of $983 million traded during the week with market rate appreciating slightly from N366.45/$1 at the start of the week to close at N366.08/$1 on Friday.
“In the week ahead, we expect the central bank to continue its current administration of the forex market by way of weekly SMIS sales and operation of multiple FX windows. Hence, we expect rates to hover around current levels,” the report added.
Activities in the domestic bonds market remained soft as the market recorded a bearish performance last week with average yield across benchmark bonds rising on four of five trading days.