Maturing Open Market Operation (OMO) worth N250.50 billion is expected to hit the financial market on Thursday, raising the system liquidity by 25.09 percent.
OMO simply means the buying and selling of government security, which enables a central bank to control the supply of money in the banking system.
The system liquidity opened the week at a robust N334.41bn, although 57.5% lower from the level on Friday, pressuring funding rates lower.
In the OMO bills market on Tuesday, the average yield across the curve increased by 3 bps to close at 0.50 percent from 0.47 percent on the previous day. Selling pressure was seen across short-term and long-term maturities with average yields rising by 5 bps and 1 basis point, respectively. However, the average yield across medium-term maturities closed flat at 0.52 percent.
“we may witness renewed momentum in demand towards the end of the week as OMO bills maturities worth N250.50 billion are scheduled to hit the system on December 24,” analysts at FSDH research said on Tuesday.
Overnight (O/N) rate declined by 1.13 percent to close at 0.88 percent on Tuesday as against the last close of 2.01 percent on the previous day, and the Open Buy Back (OBB) rate also declined by 0.50 percent to close at 0.50 percent on Tuesday from 1.00 percent on the previous day.
“We expect money market rates to remain subdued supported by abundant system liquidity, barring any significant liquidity mop-up,” analysts at FSDH research said on Tuesday.
The Nigeria treasury bills (NT-Bills) secondary market closed on a flat note on Tuesday with average yield across the curve remaining unchanged at 0.41 percent. Average yields across short-term, medium-term, and long-term maturities closed flat at 0.37 percent, 0.24 percent and 0.52 percent, respectively.
“We expect investor sentiment to remain calm due to relatively low yields on offer in the secondary market,” the analysts said.
At the foreign exchange market, Naira closed steady as the dollar traded at N476 on the black market and N475 at the Bureau De Change (BDC) segment of the market.
Naira weakened by 0.17 percent as the dollar was quoted at N394.67 as against the last close of N394.00 at the Investors and Exporters (I&E) forex window. The analysts said most participants maintained bids between N386.00 and N406.75 per dollar.
The daily foreign exchange turnover increased significantly by 183.72 percent to $236.91 million on Tuesday from $83.50 million recorded on Monday, data from FMDQ indicated.
A report by Greenwich Merchant Bank showed that profit-taking strengthened in the Bond market, sending the average yield 16bps higher than Friday’s close to 5.5%.
Across the curve, the mid-segment (+35bps) drove the market, trailed by the long (+7bps) and short (+6bps) ends, as investors sold down on the 23-FEB-2028 (+106bps) and 23-MAR-2025 (+100bps) instruments.
