BusinessDay... the voice of business: Naira climbs at parallel market, $16m sold

Naira climbs at parallel market, $16m sold
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Admin on 29 April, 2008 02:00:00
 
The naira, however, remained steady at the official market at $116.70 to the
dollar, and shed two kobo at the inter-bank market to close at N117.74 to the
dollar.
The marginal rate at which the dollar was sold stood at $116.70 to the dollar.
The FSDH Weekly maintained that the exchange rate at the official foreign
exchange market should remain stable as a result of the huge foreign reserves of
the country and the managed float strategy the CBN currently employs.
Generally, the money market ended the week tight in spite of a net inflow of
about N9.13 billion from both the government securities market and the foreign
exchange market. Consequently, the longer tenored inter-bank rates inched up
during the week.
The inter-bank market transactions showed that the 7-day NIBOR dipped to close
the week at 11 percent, a 46-basis point decrease from the previous week's
figure of 11.46 percent. The 90-day NIBOR, however, inched to close the week at
13.67 percent, a 13-basis point increase from the previous week's figure of
13.54 percent.
At the 91-day Treasury bill auction held during the week, a total of
N5.11billion worth of bill was offered and allotted; N5.42 billion was
subscribed, leading to a subscription level of 105.96 percent.
A total of N5.11billion worth of matured bills was repaid into the system,
resulting in nil flow from this segment of the market. The bill was issued at a
discount rate of 8.10 percent, a 5-basis point decrease from the previous week's
figure of 8.15 percent.
At the 182-day Treasury bill auction, the CBN offered a total of N35.80billion
worth of bill, while a total of N75.78 billion was subscribed, leading to a
subscription level of 221.66 percent. A total of N28.27 billion worth of bill
was initially allotted, while N7.5 billion was underwritten by Money Market
Dealers (MMDs); the bill was issued at a discount rate of 9.25 percent which is
5-basis point increase from the previous week's figure of 9.20 percent.
A total of N10.80 billion worth of matured bills were repaid into the system,
resulting in a total outflow of N25 billion from this segment of the market.
At the Federal Government Bonds market, the 5-year bond was on offer. At the
5-year bond auction, a total of N30 billion was offered and sold, while N57.99
billion was subscribed, representing a subscription level of 193.32 percent. 
The bond was offered at a coupon rate of 9.65 percent.
The total outflow from the primary segment of the money market was
N70.91billion.
At the secondary segment of the government securities market, total bids
received in the two-way quote trading system amounted to N14billion, with tenor
days ranging from 196 to 288 days. All the bids received were allotted, while a
total of N80billion worth of matured bills was repaid into the system. This
resulted in a total inflow of N66billion from this segment of the market. The
bills were issued at discount rates ranging between 9.21 percent and 9.15
percent.
The FSDH Weekly forecasts that the tightness in the market will ease in the
week ahead as maturing bills worth about N84 billion are expected to be repaid
into the system. “We also expect the April allocation from the Federal
Allocation Account Committee (FAAC) to trickle into the system towards the end
of the week.
“Consequently, we expect inter-bank rates to dip during the week. We still
maintain that the exchange rate at the official foreign exchange market should
remain stable as a result of the huge foreign reserves of the country and the
managed float strategy the CBN currently employs.”
At the Over-the-Counter Market for FGN Bond, a turnover of 115.2million units
worth N118.34 billion in 927 deals was recorded during the week, in contrast to
a total of 195.84 million units valued at N202.85 billion exchanged in 1,748
deals during the week ended April 17, 2008.
The most active bond (measured by turnover volume) was the 4th FGN Bond 2010
Series 14, with a traded volume of 616.6 million units valued at N16.8 billion
in 91 deals.