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T-Bills Market Trades Flat on Liquidity Constraint

By Dipo Olowookere

Friday’s session at the treasury bills market was relatively quiet as constraint in system liquidity was significantly compressed by funding for a Retail FX auction by the Central Bank of Nigeria (CBN).

According to analysts at Zedcrest Research, there were very little volumes of the debt instruments traded over the course of the day.

The apex bank did not conduct any Open Market Operations (OMO) during the day’s session after it carried out one the previous day, where it sold OMO bills worth over N200 billion.

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“We expect the market to open next week on a slightly bearish note, due to expected outflows for a Wholesale SMIS by the CBN on Monday, and further expectations for renewed supply of T-bills at a PMA on Wednesday and an expected OMO auction on Thursday.

“Investors are however expected to favor the short tenors due to the higher discounts available in the secondary market,” Zedcrest Research said.

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Meanwhile, in line with expectations, the Open Buy Back (OBB) and Overnight (OVN) rates spiked by nearly 10 percent to 19.17 percent and 19.75 percent, as the huge outflows for the Retail FX funding (estimated at N350 billion) sucked out most of the available system liquidity which opened the day at N395 billion positive.

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The rates are expected to remain pressured opening this week due to further outflows expected via a wholesale SMIS by the CBN.

Also, the OVN rate may trend as high as 30 percent, with system liquidity likely to fall into negative territory.

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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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