N179b treasury bills’ maturity, forex bid refunds crash lending rates

Forex reserves rise by $60m, parallel market steadies
The treasury bills maturity worth N179 billion and refunds to Deposit Money Banks (DMBs) for unfulfilled bids at the foreign exchange (forex) auction last week, doused tensions caused by tightened liquidity in the money market.

The developments, which raised the liquidity levels as they hit the system, pared the Open Buy-Back and Overnight rates that had already trended in double digits to 5.6 per cent and 6.4 per cent respectively on Thursday and 3.8 per cent and 4.3 per cent, down 8.9 per cent and 9.0 per cent week-to-date.

Meanwhile, the treasury bills market was broadly bearish last week as average rates increased on all trading days, reflecting market expectation of tightening monetary policy.

The rates, which started the week at eight per cent on the back of low system liquidity had reached a high of 8.4 per cent, despite the Open Market Operations maturity worth N179 billion on Thursday.

It ended the week higher as it inched up by 0.2 per cent on Friday to close at 8.6 per cent, a 0.9 per cent week-to-date increase.
Meanwhile, the nation’s foreign exchange reserves rose by 0.21 per cent to $27.88 billion in March from $27.82 billion, as the Central Bank of Nigeria intensifies is battle in defense of the Naira.

Specifically, the foreign exchange reserves rose by $59.9 million during the period under review despite depletions arising from the weekly interventions of the apex, in efforts to stabilise exchange rate.

Although the reserves’ profile have shed $1.91 billion from $29.79 billion record in the last one year due to plunge in oil prices that cut deep into Nigeria’s foreign exchange earnings, the recent resurge of the reserves’ profile has been attributed to measures by the CBN and renewed rally in the price of crude oil, although still at lower levels.

Activities in the foreign exchange market last week were stable, as the official exchange rate remained unchanged at N197/$ at the CBN and N199.50/$ at the interbank market.

However, at the Bureau-De-Change segment, the naira appreciated against the dollar marginally on all trading days of the week, with the Naira/Dollar rate trending lower from N322/$ on Tuesday to close at N320/$ at the weekend.

The parallel market was also stable as Naira/Dollar traded for N323/$ on all trading days save for Wednesday when it rose marginally to N324/$.