July 18, 2017/InvestmentOne Research
MONEY MARKET
· Money market rates declined across all tenors in the outgone week despite CBN selling N129bn worth of OMO bills which offset the N90bn maturity.
· The Overnight rate specifically rose as high as c.28% before moderating on the back of the OMO maturity towards the end of the week.
· While c.N97bn worth of OMO bills will be maturing this week, we expect money market rates to remain high as the Apex bank maintains its squeeze on system liquidity.
BOND MARKET
· Yields on all benchmark bonds increased with the change on the 7yr benchmark bond being the highest.
· The increase in yields may not be unconnected with the c.N106bn FGN bond auction where 5yr, 10yr and 20yr bonds were sold at higher stop rates than the June 2017 auction.
· In the coming week, yield movement is likely to remain subdued, in the absence of offshore interest, due to the Apex bank’s strain on liquidity.
FOREIGN EXCHANGE MARKET
· The NGN closed at N305-306 levels through the week as CBN maintained its daily intervention near the end of trading at the interbank market.
· The local currency also remained fairly unchanged at the parallel market at N367/USD as CBN sustained its FX sales.
· In the near term, we see the local currency remaining stable due to support from the Apex bank’s FX market intervention sales.
