The official window witnessed a substantial depreciation of the Nigerian Naira against the US Dollar this week. The Naira reached a historic intraday low of 1,462.00/$ at the NAFEM window, approaching its parallel-market rate of around N1,500.00/$1 following the Central Bank of Nigeria’s revision of the exchange rate methodology. Despite concerted efforts by the Central Bank and the Federal Government to bolster liquidity in the foreign exchange market, the Naira’s sharp depreciation persists. The Central Bank also introduced a new policy on the Net Open Position (NOP) of banks, mandating them to ensure that the NOP limit of their overall foreign currency assets and liabilities does not exceed “20% short or 0% long of shareholders’ funds.” This directive aims to prudently manage foreign exchange risks, prevent potential losses, and ensure accurate and timely reporting by financial institutions.
https://www.digital.zenithbank.com/ZEQ/ZEQ-jan-2026/index.html#p=1Money Market
This week was characterized by system illiquidity, following the OMO and Bond auction settlement. As expected, this spurred an uptrend in interbank rates. WoW, the Open Buy Back (OBB) rate and the Overnight (OVN) rate rose 262bps and 237bps to print at 20.20% and 21.20%, consecutively.
We expect interbank rates to hover around similar levels, barring any significant inflows.
Treasury Bills
The Treasury Bills Market kicked off on a calm note as focus was steered to the bond auction. We saw the CBN float and sell ₦350 billion across the 92-day, 176-day and 365-day bills which closed at 10.00, 13.50% and 17.00%. Furthermore, rates remained constant except on the 365-day bill, dipping by 50bps from previous auction level. Sequel to the auction, we witnessed demand on the newly issued OMO bill trading as low as 13% levels before retracing to as high as 16.30% on the bid. The CBN also issued a circular ceasing daily CRR debits and adopting an updated CRR mechanism. Week-on-week analysis indicates a 345bps gain in the average benchmark yield, closing at 9.93%
We expect rates to remain elevated as investors gear up for the PMA.
FGN Bond Market
The FGN Bond market witnessed the bond auction in which the DMO offered ₦360 billion across the 27s, 29s, 33s and 38. However, ₦418.21 billion was sold while the total subscription stood at ₦604.57 billion. The stop rate on the 27s closed at 15.00% while other bonds closed at same levels as the previous auction (15.50%, 16.00%, 16.50%). Activity was particularly centered around the auction bonds. The bears dominated the market as we saw the 27s trade as high as 16.10% on the bid, the 38s as high as 17.50% on the bid and the 53s bid at 17.35%. WoW, the average benchmark yields increased by 66bps, settling at 14.88%.
Given the current market conditions, we expect the bearish trend to persist.
Eurobond Market
The FGN Eurobond market traded on mixed sentiments this week. We saw a bullish trend triggered by the $500 million released by the CBN for the FX backlog, high oil prices and the expectation of a dovish FED. However, there was a reversal of this trend as the Fed statement pushed back on the possibility of rate cuts in March with the Nonfarm Payroll showing that 353k jobs were added against expectations of 180k. Furthermore, the bulls reigned as the average benchmark yield slid 16bps week-on-week, settling at 9.81%.
Moving forward, we expect a bear market while we await the ISM Services PMI data.
Currency Market
The value of the Naira to the dollar gained 138bps to print at ₦1435.53/$ this week at the Nigerian Autonomous Foreign Exchange Market Window.
Equities Market
The local bourse ended the week on a positive note, recovering its losses in the previous sessions after the CBN released a letter to all banks calling for the harmonization of reporting requirements on foreign currency exposure of banks. Furthermore, the ASI gained 197bps week-on-week and 157bps day-on-day to settle at 104,421.23 points. Major market drivers in today’s session were FirstBank Nigeria Holdings (+9.85%), Guaranty Trust Holding Company (+2.09%) and Nestle (+0.92%), shaking off the losses in UCAP (-0.86%) and NAHCO (-1.58%). Additionally, 39.65% the year-to-date return improved by 39.65% while market capitalization settled at ₦57.15 trillion (vs. ₦56.27 trillion the previous day). Despite this, market breadth printed at 0.42x with 64 decliners outpacing 27 gainers.
Further buttressing the bullish performance of the market, volume and value traded up 81.66% and 165.23% to close at 943.51 million units and ₦23.48 billion. FBNH held the top spot as the most traded stock by volume for the week with 383.87 million units, succeeded by Transnational Corporation of Nigeria (320.54 million units) and UBA (256.88 million units). For the top valued equities of the week, we have FirstBank Nigeria Holdings dominating as well with Dangote Cement and Zenith Bank in tow.
