OBB, Overnight Rates Rise to 11.3%, 11.8%

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By Modupe Gbadeyanka

At the end of last week, the Open Buy Back (OBB) and Overnight (O/N) rates rose w/w, closing at 11.3% and 11.8% respectively vs. 9.5% and 10.0% in the previous week.

Also, the Nigerian equities market rebounded in the past week, breaking the previous week’s bearish performance to chalk up its first monthly gain of the year (+0.74%m/m).

Performance was largely driven by speculative trading amid weak macroeconomic backdrop and thin trading volumes.

At 25,516.34 points, the ASI closed the week 0.2% higher, trimming YTD and Q1-17 return to –5.1%. The money market opened N197.3bn long; however, aggressive OMO announcements by the apex bank moderated system liquidity by c.N125.5 billion, thereby pushing key money market rates higher.

As earnings season gradually comes to a close, we expect speculative trading to take a center stage as the market awaits a new jolt.

We expect money market rates to remain elevated and close this week in the double digits, as on-going OMO issuance by the Apex bank is likely to persist, thus pressuring system liquidity, even as investors shift gaze and make provision for the PMA that will take place in the course of the week. We see a mixed to bearish week for the FI markets, with yields trends likely to be tied to the actions of the Apex bank with regards to the pace of OMO announcements as well as debits for FX intervention sales.

United Capital

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