TUE, OCT 10 2023-theGBJournal| Trading in the Treasury bills secondary market was bullish, as the average yield declined by 11bps to 7.6%.
Across the curve, the average yield closed flat at the short end but contracted at the mid (-6bps) and long (-17bps) segments due to demand for the 170DTM (-37bps) and 184DTM (-108bps) bills, respectively. Elsewhere, the average yield remained at 12.1% in the OMO segment.
Sentiments in the FGN bonds secondary market were bullish, as the average yield contracted by 4bps to 14.4%. Across the benchmark curve, the average yield declined at the short (-15bps) end as investors showed interest in the MAR-2024 (-76bps) bond.
Meanwhile, the average yield was unchanged at the mid and long segments.
The overnight lending rate contracted by 12bps to 1.6%, following the inflows from OMO maturities (NGN10.00 billion).
The local currency, the naira appreciated by 1.0% to N765.83/USD at the Investors and Exporters Window (I&E).
Last week, the I&E Window gained 1.81% to close at N741.85/US$1. Similarly, at the parallel market, the Naira gained by 0.80% to close at N1,000.00/US$1.
Currently, the gap between the I&E Window and the parallel market stands at 34.80%. Gross foreign exchange (FX) reserves of the Central Bank of Nigeria (CBN) slipped by 0.05% to US$33.22bn.
The divergence between the official and parallel market continues to widen due to pressures from the backlog of FX demand.
This situation highlights the challenges of sustaining the policy though it is unclear what alternative policy could be adopted.
It is likely a question of simultaneously tackling part of the backlog with specific measures while waiting for the problem to solve itself as demand for FX is satisfied in the parallel market.
This will take some time, in our view, with little chance of a quick fix.
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