May 10, 2017/InvestmentOne Research
Please click to download the Fixed Income and Currency Market Report for the Week ended 5th May 2017
MONEY MARKET
· Following the $200m offered for wholesale transactions and the N50bn worth of OMO sales, system liquidity was strained in the outgone week. As a result, money market rates inched upwards.
· Although there is N88bn worth of OMO bills maturing next week, we expect CBN to maintain its control on system liquidity in defence of the local currency.
BOND MARKET
· Squeeze in system liquidity also led to the 11bps w/w increase in bond yields to average 16.13%.
· With CBN likely to maintain its FX intervention and OMO auctions, we expect yields in the bond market to remain elevated.
FOREIGN EXCHANGE MARKET
· The NGN remained relative flat at the interbank and parallel market at N306/$ and N391/$ respectively, largely due to CBN’s continued intervention.
· While visibility on volume and trades being consummated is limited at the NAFEX market, the local currency opened and closed at N380/$ levels throughout the week.
· In the near term, we expect the NGN performance to be influenced by CBN’s intervention sales as well as expectation of improved liquidity in the new I & E window.
