Interbank liquidity reduced to N38 billion
Nigeria’s interbank liquidity fell further to 38 billion naira on Tuesday from 445.0 billion naira on Friday last week due to a lack of major market inflows, financial market broker reports said.
Consequently, the Open Repo (OPR) rose 0.25% to close at 14.00% on Tuesday versus the last close of 13.75% on Monday. However, the overnight rate (Y/N) remained unchanged at 14.00%.
Liquidity in the system rose to N445.0 billion on Friday due to around N300 billion in settlements for Secondary Market Intervention (SMIS) retail interbank auctions on Friday.
“Absent any major inflows this week, we expect yields to rise further despite NT-Bills maturing at N174.09 billion on Thursday to be rolled over. Thus, we advise investors to trade cautiously ahead of the Primary Market Auction (PMA) outcome and take advantage of attractive full-curve bills as well as corporate offers,” said analysts at Afrinvest Securities Limited.
“We expect rates to decline upon receipt of payments from the Federation Accounts Allocation Committee (FAAC),” analysts at Parthian Partners Limited said in a report.
Also read: TAJBank lays out roadmap for future growth, considers National Bank license
Last week, the FAAC shared a total of 680.783 billion naira, which is May 2022 revenue to the federal government, 36 states and 774 local government areas in the country.
The Treasuries market had a quiet session on Tuesday as players took a cautious stance ahead of the NTB auction scheduled for Wednesday (today).
Yields, however, rose 8 basis points on average amid full-curve selling interest, driven by the continued liquidity crunch, analysts said.
“We expect a quiet session today (Wednesday) as participants await the outcome of the auction,” analysts said.
In the foreign exchange market, the naira depreciated by 0.12%, with the dollar quoted at 421.50 naira on Tuesday against the latest close of 421.00 naira on Monday at the Investors and Exporters (I&E) forex counter. Most traders who participated in the auction held bids between N413.00 (low) and N444.00 (high) per dollar.
Foreign exchange sales at I&E and Small and Medium Enterprises (SME) counters and the interbank segment fell 49.0%, 37.9% and 44.8% to $0.29 billion, 0, $09 billion and $0.1 billion, respectively, in February 2022, the CBN said in its February 2022 Economic Report.
According to the report, the naira exchange rate at the I&E counter remained relatively stable during the review period despite the rise of cyclical and structural demand factors amid currency supply constraints. The average naira per US dollar exchange rate at the I&E counter depreciated by 0.22% to N416.95/USD in February 2022 from N416.03/USD the previous month.
The naira is trading with the dollar at 615 naira/$ on Wednesday in the unofficial market commonly known as the black market. At the current rate, the naira has lost 8.85% of its value since the start of the year when it traded at 565 naira with the dollar in the parallel market.