Share
Nigerian fixed income & Fx watch
Traders at United Bank for Africa (UBA) say they do not forecast pressure on the Naira as the Investors and Exporters window has been relatively stable, while the Central Bank of Nigeria has continued to use the FX reserves to defend the Naira. Nkechi Ezugha, Forex Trader at UBA joins CNBC Africa for more.
Wed, 09 Oct 2019 15:27:35 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The Naira is expected to remain stable within the 362 to 363 range, with the CBN utilizing FX reserves to defend the currency and maintain market stability.
- The Treasury bills market started the week on a bullish note, with market players positioning themselves ahead of significant maturities. System liquidity is relatively liquid, impacting secondary market yields.
- Investors in the bond market are cautious, showing reluctance to engage significantly, especially in longer maturities. The demand for higher rates to hold Nigerian securities may continue throughout the year.
Traders at United Bank for Africa (UBA) are not forecasting any significant pressure on the Naira in the near future. Despite speculations of possible depreciation by the end of the year, Nkechi Ezugha, a Forex Trader at UBA, remains optimistic about the stability of the Naira. The Naira has been trading around 361 to 362 against the dollar, with the Central Bank of Nigeria (CBN) actively intervening to maintain stability in the market. The FX reserves, currently at 41 billion, are expected to continue to be utilized by the CBN to defend the Naira and keep the market stable. Ezugha emphasized that the CBN's strong interventions have successfully prevented any drastic fluctuations, with the Naira likely to remain within the 362 to 363 range. Moving on to the fixed income market, Ezugha provided insights into the trading of Treasury bills. She noted that the market started the week on a bullish note and anticipates this trend to continue, with market players positioning themselves ahead of upcoming maturities worth 343 billion. The secondary market has experienced some pressure, leading to slightly lower yields across all maturities. System liquidity, currently at 200 billion, is considered relatively liquid, contributing to the pressure in the secondary market. Money market rates have been ranging between 3% to 5%. Looking ahead, Ezugha expects the current trend to persist, supported by anticipated inflows into the system. The upcoming bond auction and maturing instruments in the following weeks are expected to maintain system liquidity at around 200 to 250 billion levels. At the treasury market, short-term rates are around 10.2% to 10.5%, while long-term rates range from 11.98% to 12.1%. When discussing investor behavior in the bond market, Ezugha highlighted a cautious approach among market players, particularly at the longer maturities. Investors have shown reluctance to engage significantly in the bond space, with minimal activity observed, especially in the 2030 and 2040 maturities. This cautious sentiment is likely to persist throughout the year, as investors demand higher rates to hold onto Nigerian securities. Overall, Ezugha's insights provide a comprehensive overview of the current trends in the Nigerian fixed income and forex markets, emphasizing the stability of the Naira and the cautious approach of investors in the bond market.
SIGN UP FOR OUR NEWSLETTER
DAILY UPDATE
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.