By Obinna Chima
Liquidity in the banking system increased toÂ N1.2Â trillion as repayment for treasury bills hit the system.
Specifically, the development was attributedÂ to the spill–over effect of CentralÂ Bank ofÂ Nigeria (CBN)repayment of about N177.3Â billion for maturing open market operation (OMO) bills.
Owing to this, a report by Afrinvest Securities Limited showed that the openÂ buyÂ back (OBB) andÂ overnight (OVN) rates declinedÂ week-on-week.
At the OMO auction, the CBN issued 91-day (offered: N200Â billion, Sale: N63.9Â billion) and 245-day (offered: N500Â billion,Â sale: N684.8Â billion) instruments at 12.5Â per centÂ and 14.3per centÂ respectively.
In theÂ treasuryÂ bills market, performance was largely bullish as average rate across tenors traded lower onÂ threeÂ ofÂ fourÂ trading days. However, the CBN carried out a Primary Market Auction (PMA) where the 91-day (offered: N9.5Â billion,subscription: N10Â billion, Allotted: N9.5billion);Â 182-day (Offered: N47.6Â billion, Subscription: N20.4Â billion,Â Allotted: N17.6Â billion) and 364-day (Offered: N38.1Â billion, Subscription: N173.9billion, Allotted: N68.1Â billion) were allotted at stop rates of 11.75Â per cent, 12.70Â per centÂ and 13.04Â per centrespectively.
â€œThe auction result clearly displays investorsâ€™ appetite for long dated treasury bills instruments as interest rate outlook continues to favour gradual moderation in the next couple of months.
â€œBased on our short-term outlook, we expect the Treasury Bills market to remain bullish given the optimistic economic outlook and the CBNâ€™s policy bias for easing,â€ Afrinvest stated.
Meanwhile, in the foreign exchange market, in a bid to sustain system liquidity and maintain stability across the different segments of the market, the CBN continued its weekly interventions of US$210Â millionÂ via the Wholesale SMIS (Secondary Market Intervention Auction).
Consequently, rates traded flattish within tight bands during the week.Â The parallel market rate opened flat at N362/US$1 and remained unchanged till the end of the week.
On the other hand, in the Investor and Exportersâ€™ (I&E) foreign exchange window, the Nigerian Autonomous Foreign Exchange (NAFEX) rate opened the week appreciating 17 kobo to N359.83/US$1.
However, NAFEX rate appreciated 13 koboÂ week-on-weekÂ to close at 360.01/US$1.
The total value of open contracts of thenaira settled OTC futures in the FMDQ OTC futures market improved by US$57.2million, representing a 1.8Â per cent week-on-weekÂ growth to US$3.3billionÂ on FridayÂ from US$3.2Â billionÂ last week close. Nonetheless, the APR-2018 instrument was the most subscribed with a total market value of US$660.5m (contract price: N360.31/US$1.00) while the MAR-2019 was the least subscribed with a total market value of US$8.8m (contract price: N361.96/US$1.00).
â€œOur expectations in the near term is that rates will continue to trade within tight bands as theÂ centralÂ bank remains committed to sustaining itsÂ forexinterventions in the face of domestic macroeconomic and external sector positives, including the steady accretion to the external reserves,â€ the firm added.