…The naira fell by 0.6% to N1,543.03 against the U.S dollar at the Nigerian Foreign Exchange Market (NFEM) despite the intervention from the CBN
SAT JAN 11 2025-theGBJournal| Activities in the FGN bond secondary market remained mixed, albeit with a bearish tilt, for the third consecutive week as players continued to trade cautiously in anticipation of the Q1-25 FGN bond calendar.
Hence, the average yield inched higher by 8bps to 19.9%. Across the benchmark curve, the average yield increased at the short (+8bps), mid (+13bps), and long (+9bps) segments following selloffs of the MAR-2027 (+38bps), APR-2032 (+38bps) and JUN-2053 (+52bps) bonds, respectively.
Next week, we expect the release of December’s CPI data to influence the direction of market activities. Meanwhile, we also maintain our medium-term expectation of elevated yields consequent on anticipated monetary policy administration globally and domestically, and sustained imbalance in the demand and supply dynamics.
Meanwhile, the naira fell by 0.6% to N1,543.03 against the U.S dollar at the Nigerian Foreign Exchange Market (NFEM) despite the intervention from the CBN, selling c.USD50.00 million to authorized dealers.
Notably, the country’s FX reserves declined for the first time in 5 weeks by USD31.56 million w/w to USD40.85 billion (08 January).
In the forwards market, the naira rates decreased across the 1-month (-1.2% to N1,592.88/USD), 3-month (-2.0% to N1,663.99/USD), 6-month (-3.6% to N1,775.56/USD) and 1-year (-5.6% to N1,993.02/USD) contracts.
We expect the FX liquidity to remain suboptimal despite CBN’s recent intervention, as FPI inflows have remained weak.
Consequently, barring any significant inflows from the CBN, the naira could likely come under pressure in the short term just as FX demand increases further.
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