T-Bills Market Reverses Losses After Significant Boost in Liquidity

By Dipo Olowookere

A significant boost in system liquidity on Friday influenced a reversal in losses from Thursday’s session at the local treasury bills market, analysts at Zedcrest Research said.

In its daily fixed market income report, the Lagos-based firm said the boost in liquidity came from the net Open Market Operations (OMO) credit, retail foreign exchange refunds and Paris Club refunds in the previous session.

It was observed that at the market yesterday, investors hunted for yields on the shorter end of the curve.

However, the longer end of the curve remained slightly pressured, with yields closing 0.20 percent lower on the day.

“Opening next week, we expect the market to remain relatively tempered, with inflows from FAAC payments expected to further bolster system liquidity.

“We however expect yields to become slightly pressured as market players look forward to the PMA on Wednesday, whilst also expecting a further OMO auction on Thursday, with uncertainties around the current spate of rate hikes by the Central Bank of Nigeria (CBN),” the report said.

In a related development, Business Post reports that the average money market rate depreciated on Friday by 0.84 percent to settle at 10.88 percent.

While the Open Buy Back (OBB) rate went down by 1.17 percent to 10.33 percent from 11.50 percent, the Overnight (OVN) rate declined by 0.51 percent to 11.42 percent from 11.93 percent.

The drop came on the back of boost in liquidity from the retail forex refunds and Paris club payments in the previous session.

System liquidity, which opened the day at 587 billion positive, is expected to close the week at N237 billion as a result of outflows of about N350 billion for a Retail SMIS by the apex bank.

However, the rates are expected to trend lower opening next week, with inflows from FAAC payments of about N382 billion expected to further bolster system liquidity.