Zock Capital & Investment Market Update As Of July 30, 2021
FOREIGN EXCHANGE MARKET
The CBN has directed all Deposit Money Banks (DMBs) to set up teller points at designated branches across the country to fulfill legitimate FX requests for Personal/Business Travel Allowances (PTA), tuition fees, medical payments, SMEs transactions, amongst others. Moreover, the DMBs are required to establish electronic applications and alert systems to update customers on the status of their FX requests.
At the I&E FX market, Naira appreciated by 0.06 % as the dollar was quoted at ₦411.44 against the last close of ₦411.67. Most participants maintained bids between ₦387.67 and ₦413.00 per dollar.
The exchange rate falls at the official market as forex turnover drops by 83%
Dollar to Naira having a ₦5 fall to ₦515.00 against #520.00 the previous day. This corresponds to a 0.96% fall compared to the previous day. The rate had dropped following the announcement of the ban placed on the sale of forex to BDC operators in Nigeria by the CBN Governor, Godwin Emefiele.
DAILY FOREIGN EXCHANGE RATES (DOLLAR / POUNDS / EURO )
CBN/ INTERBANK RATES
FIXED INCOME SECURITIES AND MONEY MARKET UPDATE
The treasury Bills secondary market experienced bullish sentiment with average yield across the curve decreasing by 36 bps to close at 5.90 % from 6.26 % on the previous day. Average yields across short-term and medium-term maturities declined by 95 bps and 58 bps, respectively. However, the average yield across the long-term maturities increased by 4 bps. Yields on 11 bills fell with the 14-Oct-21 maturity bill recording the highest yield decline of 112 bps, while yields on 8 bills advanced with the 9-Jun-22 maturity bill recording the highest yield increase of 14 bps. The treasury bills secondary market saw a mixed sentiment with average yield across the curve decreasing by 6 bps to close at 6.26 % from 6.32 % on the previous day. Average yields across short-term and mid-term maturities declined by 27 bps and 12 bps, respectively.
However, the average yield across the long-term maturities increased by 7 bps. The
For the OMO bills market, the average yield across the curve decreased by 2 bps to close at 8.69% as against the last close of 8.71 %. Mild buying interest was seen across the short-term maturities with the average yield falling by 6 bps. However, the average yields across medium-term and long-term maturities closed flat at 8.79 % and 9.12 %respectively. Yields on 3 bills compressed with the 10-Aug-21 maturity bill recording the highest yield decrease of 26 bps, while yields on 21 bills remained unchanged.
TREASURY BILLS PRIMARY MARKET AUCTION (PMA)
BENCHMARK SECONDARY MARKET TREASURY BILLS
The Overnight rate decreased by 3.25 % to close at 7.75 % as against the last close of 11.00 percent, and the Open Buy Back rate also decreased by 3.25% to close at 7.50 % compared to 10.75 % on the previous day.
PREVIOUS FGN BOND PMA AUCTION RESULT
FGN bonds secondary market recorded a bullish session as the average bond yield across the curve cleared lower by 13 bps to close at 9.25 % from 9.38 % the previous day. Average yields across the short and long-tenor of the curve fell by 18bps and 3 bps, respectively. However, the average yield across the medium tenor of the curve increased by 8 bps. The FGNSB 16-OCT-2021 bond was the best performer with a decline in yield of 95 bps, while the 23-FEB-2028 maturity bond was the worst performer with an increase in yield of 17 bps.
FGN BOND MARKET YIELD CURVE
FGN SECONDARY MARKET BENCHMARK BOND
MARKET NEWS HEADLINES: CBN and Nigerian banks battle currency speculators
The Currency speculators who profit from round-tripping and other currency manipulation practices are in trouble, as the Nigerian central bank and its stakeholders form a coalition in facing such threats. At the parallel market, the naira appreciated N520 to a dollar late Thursday, up from the previous day’s close of N525 to a dollar. Bank CEOs expressed their appreciation by pledging support for the new foreign exchange measures coming from the Central Bank of Nigeria (CBN) and its efforts to stabilize foreign exchange. Godwin Emefiele, the Governor of the Central Bank, had ordered all banks to set up teller points at designated branches so they could, in turn, fulfill legitimate FX requests for travel allowances, business allowances, tuition fees, medical payments, and SMEs transactions, among others. In a presentation at the webinar, Access Bank’s Managing Director and Chief Executive Officer, Herbert Wigwe said, “The banking industry is willing and ready to assist with this function.”Compliance measures are very strict at the banks, such as confirming eligibility and performing verifications.“We expect that all banks in Nigeria will be able to meet these requirements. The banks have more than enough capacity to do this if you look at all their branches nationwide,” he added.
Exchange Rate Will Fall To N423/1$, Bank CEOs Assures Nigerians
The Committee of Banks Chief Executive Officer headed by the CEO of Access Bank, Herbert Wigwe has assured that the exchange rate will drop to around N423 to a dollar. The Committee of Bank CEOs addressed the media on Thursday following the halt in the sales of forex to Bureau De Change operators by the directive of the Central Bank of Nigeria (CBN). Addressing the question on the sharp spike which saw the dollar hit N523, the Chief Executive Officer of Guarantee Holding (GTCo), Segun Agbaje said: “What we saw in the market yesterday and today is an aberration.“The rate will come down. Very soon, you will buy at N423 or N425 at most. ”He said people can start working into any bank branch to initiate their request. Wigwe said the CBN has sent out circulars asking Banks to set up dedicated channels for all those requesting invisible. There will be no additional cost charged by the banks for offering these services,” he added.
IMF Retains 2.5% Growth Estimate For Nigeria
The International Monetary Fund (IMF) has retained Nigeria’s 2.5 percent economic growth forecast for 2021. The institution said this in its World Economic Outlook (WEO) for July titled “Fault Lines Widen in the Global Recovery” released on Tuesday in Washington DC. According to it, the slow rollout of vaccines was the main factor weighing on the recovery for Low-Income Developing Countries (LIDCs) which Nigeria is part of. It also retained its 6% growth forecast for the global economy for 2021 and 4.9% in 2022, adding that though the global forecast was unchanged from the April 2021 WEO, there were offsetting revisions. The IMF had at its 2021 Virtual Spring Meetings in April, projected a 2.5% growth for Nigeria’s economy in 2021, up from 1.5% projected in January. It said that in LIDCs, the overall fiscal deficit in 2021 was revised up by 0.3 percentage points from the April 2021 WEO, mainly because of the re-emergence of fuel subsidies as well as the additional COVID-19 and security related support in Nigeria.“Still, at 5.2% of Gross Domestic Product (GDP), the overall fiscal deficit remains well below that of advanced and emerging market economies, reflecting financing constraints, about 60% of LIDCs are assessed to be at high risk of or in debt distress.“The public debt-to-GDP ratio for 2021 is projected at 48.5%.
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