Nigeria’s foreign exchange reserves rose to $41.00 billion on 19 August, reaching their highest level in 44 months, according to data from the Central Bank of Nigeria (CBN). This marks the strongest position since 3 December 2021 and reflects a steady build-up in recent weeks following months of gradual depletion linked to debt repayments. The increase in August has been particularly sharp. Reserves climbed from $39.54 billion on 1 August to $41.00 billion by 19 August, a rise of about $1.46 billion (3.69 per cent) in less than three weeks. According to the CBN, the increase strengthens its ability to stabilise the naira in the official market, manage liquidity, and resist speculative pressure. The momentum also signals improved confidence in the economy as both oil and non-oil inflows have picked up. On a year-to-date basis, however, gains remain modest. Reserves opened 2025 at $40.88 billion on 31 December 2024. At $41.00 billion, the increase represents about $124 million (0.30 per cent). Most of the improvement has been concentrated in the past five weeks after a subdued first half of the year. The CBN noted that increased capital inflows, improved crude oil production, rising non-oil exports, and reduced imports have supported foreign exchange market stability.
Money Market
System liquidity opened the session with a surplus of ₦287.76 billion. Week-on-week, the Open Buy Back (OBB) rate declined by 320bps to close at 32.10%, while the Overnight (OVN) rates decreased by 325bps to close at 29.15%.
We expect rates to moderate in the coming sessions, supported by possible FAAC inflow and anticipated OMO maturities, which should temporarily ease funding pressures, barring any unexpected outflows.
Treasury Bills Market
The FGN Treasury Bills market opened the week on a calm note as investors traded cautiously ahead of the NTB auction, with the 6 Aug bill quoted at 16.40%/16.10%, while moderate activity was seen around the Nov 20 bill at 16.50%/16.25%. Focus then shifted to the auction, where the DMO sold ₦291.79bn against a ₦230bn offer, with total subscriptions of ₦396.42bn; stop rates on the 91-day and 364-day bills rose by 35bps and 90bps to 15.35% and 17.44%, respectively, while the 182-day remained unchanged at 15.50%. The market turned active thereafter as unmet demand drove trading, before the CBN announced a surprise OMO auction, offering ₦600bn across the 89-day and 124-day bills. Strong demand saw subscriptions of ₦1.03trn, with ₦897.19bn sold; notably, the stop rate on the 124-day bill spiked by 229bps to 25%, marking a sharp repricing at the short end of the curve. Week-on-week, the average benchmark yield increased by 38bps to close at 18.40%.
We anticipate an active start to the week on the back of robust system liquidity.
FGN Bond Market
The FGN Bonds market maintained a bearish tone throughout the week as cautious sentiment persisted across trading sessions. The week opened quietly, with the 2033 maturity quoted at 17.55%/17.30% before closing weaker at 17.75%/17.55%, as yields hovered around the 17.50% level. This sentiment filtered into the following session, with activity concentrated on the mid-tenor bonds; however, a mild recovery emerged towards the close, with the 2033 maturity quoted at 17.55%/17.40%. Midweek, market attention shifted to the NTB auction, keeping activity subdued but mildly bearish, with the 2033 paper quoted at 17.70%/17.40%. Sentiment turned notably weaker after the T-bills auction results showed a 90bps jump in the 364-day stop rate to 17.44%, further pressured by the newly revised Q3 bond auction calendar. Yields on the mid-end of the curve consequently widened, with the 2032 maturity quoted at 18.00%/17.70%. The bearish bias persisted into the week’s close, as the 2033 bond was seen at 18.20%/17.90%, sealing a weak finish for the market. Week-on-week, the average benchmark yield inched upward by 8bps to close at 16.50%.
We expect a slow start to the week, with sentiment hinged on Monday’s bond auction outcome, which should guide market direction.
FGN Eurobond Market
The FGN Eurobonds market opened the week on a slightly bearish note, as sentiment weakened following last week’s higher-than-expected U.S. PPI print, with yields inching higher as risk appetite dwindled. Bearish sentiment persisted mid-week, with geopolitical headlines dominating attention after Donald Trump called for a one-on-one summit between Putin and Zelenskyy, fueling hopes of a potential Ukraine ceasefire, though market participants remained cautious. As the week progressed, the market stayed quiet with investors awaiting clearer signals on potential rate cuts, while comments from Fed Governors Schmid and Hammack dismissed the case for immediate easing, tempering expectations. The week closed on a positive note as investors traded calmly ahead of Powell’s speech at Jackson Hole, after which he raised hopes of a September rate cut, prompting yields to decline significantly as Eurobond prices rallied. Week-on-Week, the average benchmark yield increased by 15bps to 7.92%.
We expect a quiet start of the week following the UK bank holiday on Monday; however, attention will be on key economic data including prelim GDP and core PCE data.
Currency Market
The value of the Naira to the dollar declined by 0.17% to close at ₦1535.04/$ at the Nigerian Foreign Exchange Market Window (NFEM).
