May 24, 2017/InvestmentOne Research
Please click to download the Fixed Income and Currency Market Report for the Week ended 19th May 2017
MONEY MARKET
· O/N and OBB rates ended the week at 26% and 33% from 63% and 58% level mid-week following refund of Naira debit for FX auction conducted earlier in the week to banks..
· The 1month, 3month and 6month NIBOR rates however rose to 20%, 22% and 24% level respectively on Friday due to continued pressure on system liquidity from OMO and FX auctions.
· In the coming week, we expect improvement in system liquidity from inflow of c.N131bn OMO maturity hitting the system on Thursday.
· That said, we however see OMO bills sales by the CBN during the week to drain system liquidity in defense of the local currency.
BOND MARKET
· In response to limited system liquidity, the bond market was largely bearish in the outgone week. Hence, yields inched up by an average of 10bps on the three benchmark bonds.
· Yields on the 5yr, 7yr and 10yr benchmark bonds expanded by 12bps, 14bps and 4bps w/w to settle at 16.45%, 16.23% and 16.17% respectively.
· Going into the new week, we see yields remaining at current level given continued pressure on system liquidity from OMO and FX auctions.
FOREIGN EXCHANGE MARKET
· At the interbank market, the Naira firmed by +0.05% against the USD to end the week at N305.45.
· At the parallel market, the local unit appreciated by +1.6% w/w to the dollar to close at N380.
· Going into the new week, we expect NGN’s performance to see support from FX sales by the apex bank as well as improved liquidity at the I & E FX window.
