Under the leadership of Governor Olayemi Cardoso, the Central Bank of Nigeria (CBN) announced the successful clearance of a $7 billion backlog in foreign exchange transactions. This accomplishment fulfills Cardoso’s commitment to addressing the backlog, with meticulous efforts dedicated to settling outstanding transactions. The CBN reported a significant boost in external reserves, reaching $34.11 billion, the highest level in eight months, driven by remittances from Nigerians abroad and increased purchases of local assets by foreign investors. Independent auditors from Deloitte Consulting verified the legitimacy of each transaction, ensuring that only valid claims were honored. The backlog clearance aligns with the CBN’s strategy to stabilize the exchange rate, mitigate imported inflation, and enhance confidence in the banking system and economy. Cardoso underscored the significance of this action in restoring credibility and confidence in Nigeria’s economy, signaling a positive stride towards a more resilient and stable financial landscape, thereby fostering confidence among investors and businesses.
Money Market
System liquidity concluded the week at ₦52.77 billion long. WoW, the Open Buy Back (OBB) rate and the Overnight (OVN) rate slid 407bps and 378bps to print at 26.22% and 27.29%, consecutively.
We expect a moderation in interbank rates due to the bond coupon payments.
Treasury Bills Market
The Treasury Bills market traded calmly, with a bullish tilt. The most sought-after papers were the February and March bills. We saw trades consummated on the 6-Feb-25 bill and 20-Feb-25 bill at 18.65% and 18.55%, respectively. Also, we saw offers on the 5-sept-bill at 16.40% but few bids to match while the 6-Mar-25 bill traded 19.00/18.80. Week-on-week, the average benchmark yield declined by 139bps to 17.58%.
We expect a calm session focus will be on the MPC meeting.
FGN Bond Market
The FGN local bond Market featured the bond auction in the week under review. At the auction, the DMO offered ₦450 billion across the 20-Mar-27 bond (new issue), 31s and Feb 34s. Total subscription stood at ₦615.01 billion while ₦475.66 billion was sold. Stop rates printed at 19.94% on the 27s while rates on the 31s and 34s rose by 150bps and 145bps to close at 20.00% and 20.45%. It was a bearish week as investors reacted to the new FX-related bond issuances. We saw trades pass through the 38s at 19.00%, the 53s at 18.65% while the FEB 34s was bid at 20.95% and offered at 20.55%. Week-on-week, the average benchmark yield rose 76bps to 19.25%.
We expect a quiet trend as investors wait on guidance from the MPC meeting.
FGN Eurobond Market
The FGN Eurobond market traded on mixed sentiments this week. Earlier this week, we witnessed a bearish session as market participants waited on the FED interest rate decision. However, the market saw bullish sentiments as investors reacted positively to the possibility of three rate cuts. Furthermore, the S&P Global manufacturing PMI printed at 52.5 against the consensus of 51.7 while the Services PMI printed at 51.7 less than expectations of 52. Fed Chair Powell stated that the central bank cannot rely on only macroeconomic data but needs to hear from people and businesses. Ultimately, the bulls dominated as the average benchmark yield dipped 61bps week-on-week, settling at 9.33%.
We expect the bullish trend to persist.
Currency Market
The value of the Naira to the dollar appreciated by 10.69% to print at ₦1431.49/$ this week at the Nigerian Autonomous Foreign Exchange Market Window.
Equities Market
The local stock market wrapped up the week on a positive note, with the ASI showing a 25 basis points day-on-day surge. However, it experienced a decline of 42 basis points week-on-week, closing at 104,647.37 points. Noteworthy in today’s session were the banking stocks such as GTCO (+3.81%), FBNH (+2.25%), Zenith Bank (+1.27%), and Access Corporation (+1.69%), which offset the decline in NB (-3.45%). Furthermore, the year-to-date return settled at 39.95%, with market capitalization closing at ₦59.18 trillion compared to ₦59.03 trillion the previous day. Market breadth concluded positively at 1.53x, with 49 advancers surpassing 32 decliners.
Analysis of trade metrics revealed significant increases week-on-week, with volume and value traded up by 132.58% and 184.37%, respectively, reaching 505.19 million units and ₦14.24 billion. FBNH led the value chart for the week at ₦7.48 billion, followed by GTCO at ₦6.47 billion and Transnational Power at ₦5.97 billion. UBA led the top equities by volume for the week with 209.44 million units, followed by FBNH at 187.18 million units and Access Corporation at 168.26 million units.
We expect the bullish trend to persist.