- Upbeat rally continues with N240bn gains in midweek trading on NGX
As a result of liquidity pressure, interbank rates were adjusted upward in response to the Central Bank of Nigeria’s monetary policy tightening.
The rate hike has altered the money market instrument pricing, and this is expected to reflect on the borrowing rate at the CBN standing lending facility.
On Wednesday, the money market rates inched higher, according to analysts.
This happened despite a sizable liquidity balance in the financial system.
Meanwhile, the Nigerian interbank offered rates declined across all tenors, reflecting system liquidity, Cowry Asset Limited stated in a note.
But, the open repo rate and overnight lending rate increased due to adjustments in the money market environment.
According to analysts, the opening system liquidity improved further as more credits entered the system.
FAAC inflows lifted the balance in the financial system, and there were inflows from matured OMO bills, including bond coupon payments.
Data from the FMDQ securities exchange platform revealed that the open repo rate (OPR) and the overnight lending rate increased by 18 bps and 8 bps to 20.33 percent and 20.88percent respectively.
Weighing the impacts of rates adjusted by the CBN, investment banking analysts at AIICO Capital Limited anticipate that interbank rates will increase in response to the recent MPC decision.
The decisions from the two-day Monetary Policy Committee meeting in September 2024 saw the Central Bank hike the benchmark lending rate by another 50 bps to 27.25 percent
The committee deemed inflation still elevated despite the recent deceleration.
Other notable actions included increasing the Cash Reserve Ratio for commercial banks to 50.00 percent (from 45.00%) and raising the CRR for other financial institutions to 16.00 percent (from 14.00%).
Upbeat rally continues with N240bn gains in midweek trading on NGX
Meanwhile, the local bourse maintained its bullish momentum on Wednesday, with the All-Share Index rising by 0.42 percent to close at 98,987.42 points, bringing the year-to-date return to a solid 32.38 percent.
Market capitalization also increased by 0.42 percent , closing at ₦56.88 trillion, adding ₦240.7 billion to investors’ portfolios.
The session ended with 31 gainers and 24 decliners. Leading the gainers were FLOURMILL (+10%), SEPLAT (+10%), ELLAHLAKES (+9.97%), HONYFLOUR (+9.87%), and ABCTRANS (+9.57%).
On the other hand, the top losers were MULTIVERSE, CAVERTON, MANSARD, FBNH, and FIDELITYBNK, all of which posted losses.
Despite the bullish trend, sectoral performance was mixed: the Banking and Insurance sectors dropped by 0.70 percent and 0.35 percent, respectively, while Consumer goods, Oil/Gas, and Industrial goods sectors saw gains of 0.50 percent, 3.27 percent, and 0.03 percent.
Trading activity was somewhat subdued, with the number of deals and trading volume decreasing by 19.52 percent and 20.93 percent, respectively, with 603.3 million shares traded across 9,723 deals. However, the traded value rose by 6.75 percent to ₦12.58 billion. FIDELITYBK was the most actively traded stock by volume, with 121.7 million shares exchanged in 1,014 deals.
In the money market, NIBOR increased across all maturities, signaling system illiquidity. However, Key money market rates such as the Open Repo Rate (OPR) fell by 0.05 percent to 20.28 and Overnight Lending Rate increased by 0.07 percent to 20.88.
Nigerian Interbank Treasury Bills True Yield witnessed a mixed movement across all maturities. The average secondary market yield on T-bills increased by 1.60 percent to 20.22 percent due to sell sentiments.
In the secondary market for FGN Bond market, there was negative trading activity resulting in a 0.04 percent increase in the average yield to 18.72 percent.
In Nigeria’s sovereign Eurobonds market, buy pressure at the short, mid and long ends of the yield curve led to a 0.19 percent decrease in the average yield to 9.45 percent.
In the foreign exchange market, the Naira depreciated by 0.54 percent, closing at ₦1,667.42 per dollar at the official market.
In the parallel market, the Naira closed at ₦1,675 to the dollar.
