March 16, 2017/InvestmentOne Research

Please click to download the Fixed Income and Currency Market Report for the Week ended 10^th March 2017

MONEY MARKET 

·         Following OMO and FX auctions conducted by the CBN, money market rates remained elevated in the outgone week

·         Both OBB and O/N  closed the week at 14% and 15% levels.

·         We expect rates to  remain high at the start of the week, given  limited  system liquidity .

·         Despite c.N126bn worth of maturities hitting the market this week, we expect CBN to keep liquidity tight via OMO sales.

BOND MARKET

·         On increased demand, bonds yield contracted w/w mostly on long-dated maturities.

·         On the average, yields closed lower by 20bps, with yields on the 10yr benchmark bond settling at 16.16%.

·         Going into the new week, we expect movement in yields to be influenced by February inflation report as well as expectation regarding the outcome of the  FG bond and savings bond auctions.

FOREIGN EXCHANGE MARKET

·         NGN weakened by -0.18% w/w at the interbank market to berth at N305.80 on Friday, while CBN sold c.$170m for both wholesale and retail users.

·         At the parallel market, the Naira gained +0.4% against the USD to end the week at N463 levels.

·         We expect the Naira to remain under pressure at the parallel market due to continued demand-supply imbalance.