WEDNESDAY,30 JUNE 2010 01:10 BLESSING ANARO  

 

Although the capital market is currently on a three-month low in its All Share Index (ASI), there are indications that the money market will continue to enjoy impressive performance with N60 billion of various maturities hitting the market this week. This is aside the fact that some energy companies have made moves toward pumping United States dollars into the forex market.

 

“We expect about N60 billion worth of maturities to hit the system in the coming week. This should maintain relative liquidity in the system and cause inter-bank rates to drop or at least remain low,” noted the FSDH Weekly Research.

 

Chevron is said to have sent a notice of its month-end dollar sales to some banks for last week, while more energy firms are expected to sell dollars this week as part of their month-end activities. These liquidity injections over sometime now have also seen the Over-the-Counter Bond market grow in terms of activities. Last week, turnover stood at 346.55 million units worth N381.44 billion in 3,629 deals in contrast with a total of 257.51 million units valued at N280.91 billion exchanged in 2,452 deals during the week ended Thursday, June 17, 2010.

 

As in the preceding week, the most active bond (measured by turnover volume) was the 7th FGN Bond 2013 Series 1, with a traded volume of 85.2 million units valued at N84.67 billion in 803 deals. This was followed by the 5th FGN Bond 2013 Series 1, with a traded volume of 37 million units valued at N40.89 billion in 309 deals. Twenty of the available 37 FGN Bonds were traded during the week, compared with 27 in the preceding week.

 

Also, at the 3-year FGN Bond auction, N30 billion was offered last week, while it was 327 percent subscribed at N98.10 billion. The Bond carried a marginal rate of 6.24 percent. At the re-opening of the 10-year FGN Bond auction, the CBN offered N30 billion, while it was 214.03 percent subscribed at N64.21 billion. The Bond carried a marginal rate of 7.61 percent. Also, at the re-opening of the 20-year FGN Bond auction, the CBN offered N20 billion, while it was 335.10 percent subscribed at N66.05 billion. The Bond carried a marginal rate of 8.69 percent.

 

Based on past inflow of funds the previous weeks, the money market remained relatively liquid during the week as a result of the Federation Account Allocation Committee (FAAC) disbursement that hit the system for the month of June in the previous week. Consequently, inter-bank rates moderated within a narrow band to end the week.

 

Available data indicate that the 7-day Nigerian Inter-Bank Offer Rate (NIBOR) closed the week at 2.35 percent, a 15 basis point decrease from the previous week’s figure of 2.50 percent, while the 90-day NIBOR closed the week at 7.04 percent, a 25 basis point decrease from the previous week’s figure of 6.79 percent. There was no activity at the 91-day, 182-day and 364-day Treasury Bills auction.

 

At the foreign exchange auction held Monday, June 21, 2010, the CBN offered a total of $300 million, while demand stood at $287.53 million, representing 95.84 percent of what was offered, while the sale was same as the demand. On Wednesday, June 23, 2010, the CBN offered $250 million, while demand stood at $243.13 million, representing 97.25 percent of what was offered, and the sale was same as the demand.

 

During the week, a total of $550 million was offered, compared with $700 million in the previous week (a 21.43 percent decline in offer), while $530.66 million was sold, same as the demand, representing 96.48 percent of the offer.

 

The value of the naira appreciated at the three segments of the foreign exchange market. At the inter-bank segment of the foreign exchange market, the value of the naira appreciated by 65 kobo to close at N150.95/$, compared with N151.60/$ in the previous week.

 

At the parallel market segment of the foreign exchange market, the value of the naira appreciated by 20 kobo to close at N153.30/$ from the previous week’s figure of N153.50/$; while at the official market, the naira appreciated by 11 kobo to close at N148.60/$ from the previous week’s figure of N148.71/$.

 

(Source:BusinessDay)