SAT MAY 30 2026-theGBJournal| Nigeria’s fixed-income market reflected a mixed investor mood during the week, as a substantial liquidity injection from Open Market Operation (OMO) maturities fueled demand for short-term securities while prompting renewed selling pressure in the bond market.
The overnight lending rate declined by 5 basis points week-on-week to 22.2%, supported by inflows of approximately N1.97 trillion from maturing OMO bills, which boosted banking system liquidity.
As a result, the average system liquidity position strengthened significantly to a net long position of N5.26 trillion, compared with N4.11 trillion in the previous week, providing ample funds for investors seeking short-duration assets.
The liquidity-driven environment sparked bullish trading across the Treasury bills market, with average secondary market yields declining by 5 basis points to 18.8%. Demand remained concentrated across the curve, leading the average yield on Nigerian Treasury Bills (NTBs) to contract by 1 basis point to 17.5%.
The OMO secondary market also witnessed strong buying interest, with average yields falling by 9 basis points to 21.0%, aided by renewed offshore participation as foreign investors sought to deploy funds following the sizeable maturity inflows and the relative attractiveness of Nigeria’s high-yield environment.
In contrast, sentiment in the Federal Government bond market remained cautious, as investors continued to take profits and reposition portfolios amid expectations surrounding future debt issuance and interest rate direction.
Consequently, average bond yields rose by 8 basis points to 16.3%. Selling pressure was most pronounced at the short end of the curve, where the MAR-2027 bond yield jumped 121 basis points, while yields on the AUG-2030 and JUN-2038 papers rose by 57 basis points and 38 basis points respectively, pushing average yields higher across the short, mid and long tenors.
Meanwhile, the foreign exchange market remained largely stable.
The naira closed unchanged week-on-week at N1,375.00 per dollar, as available foreign currency supply adequately matched market demand.
Stability also persisted across the forward market, with rates holding firm at N1,397.05/USD for one-month contracts, N1,436.05/USD for three-month contracts, N1,491.92/USD for six-month contracts and N1,604.66/USD for one-year contracts, indicating that market participants maintained relatively steady expectations for the currency’s medium-term outlook.
Providing additional support to investor confidence, Nigeria’s gross external reserves climbed by $359.8 million to $49.34 billion as of May 26, extending gains for a third consecutive week.
The continued build-up in reserves reinforces the country’s external buffers and strengthens the central bank’s capacity to support exchange-rate stability, even as investors remain divided between short-term liquidity opportunities and longer-duration fixed-income assets.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
