Nigeria’s Monetary Policy Committee (MPC) concluded its May 2025 meeting with a decision to maintain all key monetary policy parameters unchanged. The Monetary Policy Rate (MPR) was held at 27.50%, the Cash Reserve Ratio (CRR) was retained at 50% for commercial banks and 16% for merchant banks, while the Liquidity Ratio remained at 30%. The asymmetric corridor around the MPR was also kept unchanged at +500/-100 basis points. This decision reflects the MPC’s cautious approach as inflation shows signs of moderation. According to the National Bureau of Statistics (NBS), headline inflation declined to 23.71% in April 2025, down from 24.23% in March. The slowdown was also observed in food inflation, as well as in both urban and rural inflation readings. Despite this easing, inflation remains significantly elevated. The MPC therefore chose to pause further rate hikes to fully assess the impact of earlier monetary tightening. The Committee also reaffirmed its commitment to maintaining macroeconomic stability, curbing inflationary pressures, and supporting the value of the naira amid ongoing global uncertainties.
Money Market
System liquidity opened the session with a ₦431.87 billion surplus. The Open Buy Back (OBB) rate declined by 8bps to close at 26.42%, while the Overnight (OVN) rates declined by 4bps to close at 26.92%.
FGN Treasury Bills Market
The Treasury Bills market opened quietly, with limited activity, particularly on long-tenor bills like the April 2026 OMO, quoted at 22.00%/21.80%. Sentiment shifted slightly as participants anticipated ₦1.1 trillion in OMO maturities. In response, the CBN offered ₦500 billion across 182-day and 210-day tenors in an OMO auction, attracting ₦743.25 billion in bids and allotting ₦655.25 billion. Stop rates rose sharply to 23.77% (+112bps) and 23.98% (+126bps), respectively. Mid-week, investor interest picked up, particularly in the 14 Apr OMO bill, though offers were scarce. The PMA also drew strong interest, with ₦1.17 trillion in subscriptions for ₦500 billion on offer. ₦615.8 billion was allotted, while stop rates for the 91-day and 182-day bills held at 18.00% and 18.50%, and the 364-day bill dropped 7bps to 19.56%. The week ended on an active note, as unmet demand from the PMA spurred buying interest. The newly issued 364-day bill was bid at 19.40%, with offers at 19.30%, and trades were seen on the 16 Dec OMO bill at 23.10%. Week-on-week, the average benchmark yield decreased by 9bps to close at 19.98%.
We expect similar sentiment to persist.
FGN Bond Market
The FGN bond market opened the week on a quiet note, with muted activity across the curve. The 2033 maturity was initially quoted at 20.00%, reflecting the cautious sentiment ahead of the MPC decision, where the CBN held all policy parameters unchanged. Mid-week, the market remained subdued as focus shifted to the NTB auction. Nonetheless, selective interest was seen on the short end, with trades on the 2027 maturity at 19.50% and the 2031 bond quoted at 19.90%/19.80%. The week ended on a similarly quiet note, with light trading activity. The 2033 maturity was bid at 19.95% and offered at 19.90%, consistent with the cautious tone that defined the week. Week-on-week, the average benchmark yield declined by 2bps to close at 18.59%.
Investor sentiment is expected to hinge on the bond auction, where the DMO is offering ₦100 billion on the 2029 maturity and ₦200 billion on the 2033 maturity.
FGN Eurobond Market
The Eurobond market opened the week on a bearish note, initially pressured by news of a U.S. government downgrade, which triggered a brief uptick in yields as investors reassessed risk. Sentiment was further dampened by reports that OPEC+ may increase oil production. Nonetheless, the initial selloff was short-lived and had limited market impact. Mid-week, the market rebounded slightly despite a lack of clear catalysts. U.S. macro data came in stronger than expected, with flash manufacturing and services PMIs both printing at 52.3, above forecasts, and jobless claims slightly below expectations. These supported sentiment modestly. The market opened on a bullish note later in the week, though momentum faded towards the close. Oil prices remained largely stable, with WTI settling around $61.5. Week-on-Week, the average benchmark yield decreased by 22bps to 9.54%.
We expect market sentiment to hinge on the outcome of the FOMC meeting minutes, Q/Q GDP data, and the Core PCE data.
Currency Market
The value of the Naira to the dollar appreciated by 1.14% to close at ₦1580.44/$ at the Nigerian Foreign Exchange Market Window (NFEM).
Equities Market
The local bourse ended the day with the benchmark NGX All-Share Index (ASI) declining by 14bps to close at 109,028.62. Market capitalization also decreased, closing at ₦68.52 trillion. Market breadth was positive at 1.36x. Meanwhile, trading activity was mixed on the day, as the volume of shares traded decreased by 14.37% to 637.54 million units, while the total value of shares traded declined by 0.22% to ₦18.12 billion.
Reflecting the week’s performance, the NGX All-Share Index recorded a 0.62% decline, as gains in CUTIX (+21.92%), CUSTODIAN (+21.45%) and REDSTAREX (+20.90%) were offset by losses in NEIMETH (-17.03%), ABCTRANS (-15.59%), and TRANSCOHOT (-15.03%).
Overall, the NGX has posted a year-to-date gain of 5.93%. Other notable indices are the NGX Top 30 Index (-0.13%; -0.50% 1WK; 5.71% YTD), NGX Banking Index (1.48%; -1.52% 1WK; 6.59% YTD), NGX Oil & Gas Index (-0.29%; 0.66% 1WK; -3.44% YTD), and NGX Insurance Index (-0.66%; 0.73% 1WK; -5.84% YTD).
