As business activities pick up in the second week of the New Year, it has been predicted that the money market would witness an upsurge in the demand of the naira and that increased pressure on the local currency to propel further decline.
InvestmentOne market analysts in its report noted “In the coming weeks, as business activities pick up, we expect demand for foreign currency to increase. As a result, we are likely to see the local currency continue to depreciate in the parallel market while CBN’s intervention may continue to stabilize the Naira at the interbank segment”
Meanwhile, the Nigerian Naira at the close of official business last Friday January 06, 2017 closed flat at N493 per Dollar, N595 against the GBP and N506 against the EUR.
Due to Central Bank of Nigeria (CBN’s) sustained intervention at the interbank market, the Naira remained flat at N305 levels against the USD. Though, the Naira declined -1.17 per cent to N388 against the GBP and -1.08 per cent to N332 against the EUR.
At the parallel market, the local currency closed flat at N493 against the USD, N595 against the GBP and N506 against the EUR.
However, Money market rates contracted across all tenors in the last trading session of the week ended January 06, 2017.
The market performance trend showed that while the six month Nigerian Interbank Order Rate (NIBOR) shed 7bps to 22.24 per cent, the one month and three month NIBOR rates declined by 66bps and 27bps to 15.25 per cent and 17.60 per cent respectively.
Meanwhile, as a result of the higher bond volumes on offer, analysts forecast that the bond market remain bearish in the coming week.
Bond market performance opened the new week on positive note, investors remained bearish as yields sustained upward swing . This expansion, we gathered was more pronounced on the yields on the July 2021s and the 10yr benchmark bond, as they appreciated by 12bps and 10bps to 16.36 per cent and 16.48 per cent respectively.
Also, yields on the 5yr and 7yr benchmark bonds rose by 2bps to 16.00 per cent and 15.93 per cent respectively.