Monday, 15 Nov 2010

Inter-bank rates rose to 11.75 per cent on the average, from 9.25 per cent last week, as a result of net injection of about N4.71bn into the inter-bank money market through government securities and foreign exchange transactions.

Available data from First Securities Discount House showed that there was a total inflow of N4.71bn into the money market through government securities and the foreign exchange market last week.

The seven-day Nigerian Interbank Offered Rate closed the week at 13.92 per cent, a 346 basis point increase from the previous week‘s figure of 10.46 per cent.

The 90-day NIBOR closed the week at 15.21 per cent, a 208 basis point increase from the previous week‘s figure of 13.13 per cent.

At the 91-day treasury bill auction, a total of N39.28bn worth of securities was offered, while N39.37bn was sold. The bill was 107 per cent subscribed as N42.28bn worth of bid was received.

At the 182-day TB auction, a total of N45bn worth of securities was offered and sold, while it was 136.21 per cent subscribed with N61.30bn worth of bid received.

At the 364-day TB auction, a total of N42.79bn worth of securities was offered while N54.79bn was sold. The bill was 137.75 per cent subscribed while N58.94bn worth of bid was received.

At the Open market Operations, there was a total inflow of about N111.04bn into the market through the two-way quote system and repurchase transactions. There was no mop up activities from this segment of the money market last week.

The value of the naira appreciated at the inter-bank market, but depreciated at both the official and parallel segments of the foreign exchange market during the week.

At the inter-bank market, the naira appreciated by 15 kobo to close at N150.74 against the United States dollar. At the official market, the naira depreciated by 10 kobo to close at N148.70 per US dollar, while at the parallel market, it lost 40 kobo to close at N152.40 per dollar.

On the outlook of money and fixed income markets, analysts at FSDH said, ”We expect total withdrawal of about N70bn through the FGN monthly bond auctions. We also expect the Federation Accounts Allocation Committee to meet next week to disburse the monthly allocation for the month of November.”

They added that the liquidity position and the direction of inter-bank rates during the week would depend on when the allocation for the month of November hit the banking system.

They further explained, ”We maintain that the positive outlook of oil price and the improved outlook on oil production are good indicators for good foreign exchange inflows into the economy which should ensure that the value of income appreciate marginally in the medium term.” 

Source: Punch