Money Market
Market liquidity opened the day with a balance of ₦214.24bn, a decline from previous day’s levels owing to the NTB auction settlement.
Consequently, the OPR and O/N rates increased slightly to close the day at 10.88% and 11.00% respectively as market participants funded their obligations.
We expect the rates to further increase tomorrow as banks fund for the Retail SMIS Auction.
Foreign Exchange
The NAFEX continued in its depreciation streak by ₦0.22 to close at $/₦444.72.
The demand for the Greenback continues to surpass the modest supply of Dollars at the IEFX market. Consequently, the Naira weakened by 17 Kobo to close at $/₦446.00.
We expect rates to trade at these levels tomorrow and the CBN to conduct the Bi-weekly Retail SMIS auction.
Treasury Bills
The Treasury Bills secondary market traded on a fairly active note today as market participants seek to fulfill their unmet demands from the auction conducted by the DMO yesterday. Some demands were however observed across the long end of the curve, with interest largely skewed towards the newly issued 07 Dec, 2023 bill and little offers to match these demands. Consequently, average rates inched 146bps downwards from opening levels.
Closing the week, we expect the market to trade on a quiet note as market players focus their attention on the Retail SMIS Auction tomorrow.
Bond
The Bond market opened with a bullish undertone due to elevated market liquidity. We saw few offers but significant bids across the curve. Emphasis centered around the short end of the curve, most notably, the 2024, and 2026 papers. We witnessed weak supply on the 2032 and 2037 bonds with few offers hovering at 14.60% and 15.78% respectively. However, these offers were not lifted due to low appetite for the current yield offerings.
By the close of market, yields declined by an average of 30bps and 10bps on the short and medium-term curve while the long term remained stable due to weak market activity.
Tomorrow, we expect slight reversal from the bullish sentiment as market liquidity thins out due to both funding for the NTB and Retail FX Auction.
Sources: FMDQ, Access Bank Treasury Team, CBN, Bloomberg, Nairametrics, Reuters
