Culled—Proshare
December 3, 2018/Anchoria AM Research
Money Market
The money market rate increased significantly last week as the Overnight rate (OVN) and Open Buy Back (OBB) rose to 17.36% and 16.57% respectively. Consequently, the average money market rate rose by 10.76% to settle at 16.97% due to decreased system liquidity to close at cN32bn as CBN aggressively mop up liquidity during the week with three OMO auction.
Inflow for the week included: OMO bills maturity of cN443.76bn. Outflow included: OMO sales of c161.08bn on Monday cN371.56bn on Thursday, cN119.92bn on Friday and Wholesale, Invisible and SME FX auction of $210mn.
We expect rates to drop significantly this week as anticipated inflow from October FAAC payments and OMO maturities is expected to hit the system.
| Instrument | 23/11/2018 | 30/11/2018 | Change |
| OBB | 5.83% | 16.57% | +10.74% |
| OVN | 6.58% | 17.36% | +10.78% |
Source: Anchoria AM Research, FMDQ OTC
Forex: USD/NGN
The CBN Official rate continued on its upward trend to close at N306.80/$, a 0.02% increase while the rate in the Investors and Exporters’ FX Window fell by 0.16% to close at N364.10/$. The rate at the Bureau De Change rose significantly to close at N370.50/$ from N364.50/$ last week as demand pressure was more pronounced in the market.
In response to the demand pressure, the Central Bank of Nigeria introduced a special intervention FX Cash Sales to Bureau De Change. In addition to existing market days (Monday, Wednesday and Friday), the CBN will sell $15,000 per BDC on Thursday, commencing from Thursday, 06 December, 2018.
| 23/11/2018 | 30/11/2018 | Change | |
| CBN Official Rate | 306.75 | 306.80 | +0.02% |
| I&E FX Window | 364.70 | 364.10 | -0.16% |
| Everdon BDC Rate | 364.50 | 370.50 | +1.65% |
Source: Anchoria AM Research, FMDQ OTC
Commodities
The Brent Crude oil rose by 0.15% to close at $58.50 per barrel after a report that Russia accepts the need to cut production in conjunction with OPEC while the WTI Crude Oil fell by 1.00% to close at $50.93 per barrel. This represents eight weeks of a consecutive fall in the prices of the Crude Oil futures (WTI).
Fixed Income
Bond
Following the OMO auction that witnessed a hike in rates to a year high of 15.00%, Bond market traded on a bearish note to close the week at an average yield of 15.47%, 7bps higher than the previous week yield. The sell offs witnessed was well pronounced across the long maturities most especially 2034s.
We expect the bearish sentiments to persist in the bond markets as market adjusts to the new rates from the T-bills and OMO auction last week.
Secondary Market
Source: Anchoria AM Research, FMDQ OTC
Treasury Bills
Due to decrease in system liquidity and increase in spot rate during the week, the treasury bills market traded on a bearish note. Consequently, the average yield rose by 68bps to close the week at 14.75%. Market activities were relatively active as the value of transactions rose to N1.26 trillion from N1.10 trillion in the previous week.
Primary Market Auction Result
Secondary Market
Source: Anchoria AM Research, FMDQ
Anchoria Research: +234 908 720 6076; research@anchoriaam.com