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CBN Resumes Liquidity Mop-up



  • CBN Resumes Liquidity Mop-up

The Central Bank of Nigeria (CBN) last week held a primary market auction as it offered 91-day, 182-day and 364-day instruments, which closed at marginal rates of 10.3 per cent, 12.6 per cent and 12.9 per cent respectively.

Oversubscription was recorded across all instruments on offer, which included:91-day (2 times bid-to-offer), 182-day (1.3 times bid-to-offer) and 364-day (2.3 times bid-to-offer), with a total amount of N95.7 billion successfully allotted in line with the offered amount.

According to a report by Afrinvest West Africa Limited, the CBN resumed its open market operation (OMO) auctions during the week, after holding no auction in the prior week.

The auction was held on the 4th of April for two instruments, 203-day and 304-day, which were auctioned at discount rates of 13 per cent and 13.04 per cent respectively.

The total amount allotted for the instruments were N24.6 billion (203-day) and N176.4 billion (304-day).
The report showed that the secondary market moved in line with liquidity levels at the start of the week as average yield in the market declined by 0.2 per cent to 13.4 per cent.

However, as liquidity levels moderated through the week, yields trended upwards, before paring on the final day of the week to settle the average yield at 13.4 per cent.

Also, given the scarce liquidity levels, money market rates – the open buy back (OBB) and overnight rose significantly during the week, settling 9.9 per cent and 10.2 per cent higher by the end of the week, to 19.7 per cent and 21 per cent respectively. “Given that system liquidity is expected to remain tempered as the CBN sustains OMO auctions, with N33 billion worth of instruments expected to mature on the 11th of April 2019, we expect rates to remain elevated,” it added.

FX Market

The naira last week appreciated at the Investors and Exporters foreign exchange (FX) window by 0.10 per cent to close at N360.33 to a dollar, amid a 0.97 per cent week-on-week rise in external reserves to $44.68 as at April 3, 2019. However, the interbank FX market the naira/dollar rate remained unchanged at N355.78/$ amid weekly injections of $210 million by the CBN into the FX market via the Secondary Market Intervention Sales (SMIS) of which: $100 million was allocated to Wholesale SMIS, $55 million was allocated to small and medium scale enterprises and $55 million was sold for invisibles. Also, the naira was flattish against the US dollar at the black market at N360/USD; but depreciated at the Bureau De Change (BDC) segment by 0.28 per cent to close N358/USD, according to a report by analysts at Cowry Assets Management Limited.

Meanwhile, the naira gained for most of the foreign exchange forward contracts as 1-month, 2- month, 3-month, 6-month and 12-months rates decreased by 0.16 per cent, 0.18 per cent, 0.16 per cent, 0.31 per cent and 0.64 per cent respectively to close at N362.96/dollar, N365.90/dollar, N369.19/dollar, N381.39/dollar and N403.57/dollar respectively.

But the spot rate rose (that is the naira lost) by 0.02 per cent to close at N307/USD.

“In the new week, we expect stability in the naira/dollar rate in most market segments, especially at the BDC segment, as CBN sustains its special interventions,” Cowry Assets predicted.

Bonds Market

To analysts at Afrinvest, activities at the bonds market last week further proved their earlier thesis that yields were yet to respond to changes in Monetary Policy Rate which was reduced to 13.5 per cent by the CBN’s Monetary Policy Committee at their last meeting.

They pointed out that unlike the pattern of trades in the previous week, the domestic bonds market was largely bearish in the week with average yield on sovereign bonds instruments increasing every trading day throughout the week.

Yields went up by six basis points, three basis points, six basis points, five basis points and four basis points on Monday, Tuesday, Wednesday, Thursday and Friday respectively, while average yield rose 23 basis points week-on-week.

At the close of the week, average yield rose to 14.27 per cent, from 14.04 per cent in the previous week.

Long dated bonds recorded the most sell-offs as average yields rose 26 basis points relative to average rise in yield of 21 basis points and seven basis points for medium and short-term bonds respectively.

Also, in line with its monthly bonds issuance programme, the Debt Management Office (DMO) last week offered 2-year and 3-year Savings Bonds maturing in April 10, 2021 and April 10, 2023 at 11.27 per cent and 12.276 per cent coupon respectively.

The Sovereign yield curve during the week was noticeably normal at the short-end while remaining flattish at the long-end of the curve.

“We believe the transitioning to full normalization will present enormous capital gain in the near term as we are certain that yield compression by 100 basis points to 200 basis points is inevitable, especially in the second half of 2019,” they added.

The Sub-Saharan Sovereign and Corporate Eurobonds market traded bullish during the week, a reversal of the bearish performance experienced in the previous week.

Average sovereign yield was down 50 basis points with the Zambian (-158bps), Ghanaian (-74bps), Gabonese (-72bps), Ivorian (66bps) and Nigerian (65bps) instruments recording the highest price appreciations.

On the corporate space, average yield was also down 71 basis points with Diamond 2019 (-119bps) enjoying the most buy interest as the instrument draws closer to maturity.

The International Monetary Fund last week has the Nigerian economy was recovering, giving President Muhammadu Buhari’s economic initiatives a pat on the back.

“Executive Directors welcomed Nigeria’s ongoing economic recovery, accompanied by reduced inflation and strengthened reserve buffers,” the IMF stated in its latest Executive Board’s 2019 Article IV Consultation with Nigeria.

It noted that real GDP increased by 1.9 per cent in 2018, up from 0.8 per cent in 2017, on the back of improvements in manufacturing and services, supported by spillovers from higher oil prices, ongoing convergence in exchange rates and strides to improve the business environment.

According to the Fund, headline inflation fell to 11.4 per cent at end-2018, reflecting declining food price inflation, weak consumer demand, a relatively stable exchange rate and tight monetary policy during most of 2018, but remains outside of the central bank’s target range of 6- 9 per cent.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Banks’ Credit to Economy Hits N19.33 Trillion in August



Godwin Emefile

Deposit Money Banks Credit to Economy Rose to N19.33 Trillion in August

The total credit facility to the economy rose to N19.33 trillion in the month of August.

The Central Bank of Nigeria-led monetary committee disclosed on Tuesday after the nation’s monetary policy committee meeting.

The committee attributed the improvement to the 65 percent loan-to-deposit ratio policy implemented to compel the nation’s deposit money banks to join central bank efforts at growing the real sector of the economy.

Godwin Emefiele, the Governor of the Central Bank of Nigeria, who spoke during the meeting said “The bank’s policy on Loan to Deposit ratio also resulted in a significant growth in credit to various sectors from N15.57tn to N19.33tn between end-May 2019 and end-August 2020, an increase of N3.77tn.

“This growth in credit was mainly to manufacturing (N866.27bn), consumer credit (N527.65bn), oil and gas (N477.65bn), agriculture (N287.11bn) and construction (N270.97bn).”

On monetary aggregates, broad money supply (M3) rose to 6.93 per cent (year-to-date) in August 2020 from 5.23 per cent in July 2020, reflecting the increase in both Net Foreign Assets and Net Domestic Assets.

He said total domestic credit grew by 6.94 percent in August 2020, lower than the 9.43 percent recorded in July 2020.

The committee reduced the nation’s benchmark interest rate by 100 basis points to 11.5 percent, down from the previous 12.5 percent.

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Emerging Cities Take on Established Hubs for Graduates Seeking a Career in Finance




Graduates Seeking a Career in Finance Prefer Dubai to Start Their Career

Dubai is the number one global destination for graduates who successfully complete the flagship graduate programme at one of the world’s largest independent financial advisory organisations.

On passing the intensive scheme, deVere Group routinely asks graduates in which location within the Group’s global network of offices they would like to start their international financial services career. This year, 36% have responded with Dubai.

The second most popular is London (25%); Hong Kong is third (14 %); Mexico City is fourth (13%) and Moscow is fifth (6%).

The remaining 6% is made up of other destinations including Shanghai, Geneva, Paris, and Abu Dhabi.

deVere Group CEO and founder Nigel Green comments: “This survey highlights that the next generation of financial services professionals are open to look beyond the traditional and more established global financial hubs.

“The order of the top destinations changes with each group of grads we take on, but Dubai, London, and Hong Kong are typically in the top five somewhere.

“This is because, quite understandably, these global hubs of finance, commerce and technology represent centres of enormous possibilities for ambitious individuals about to embark on careers as international wealth-advisory and fintech professionals.

“There are some common traits amongst these cities, including that English is commonly spoken, they are politically and economically stable, there is a high level of internationally-minded high net worth individuals, and by relocating to these places one can usually expect comparatively high financial rewards.”

He continues: “What is different this year is that for the first time emerging financial hub cities are making the top five. Mexico City and Moscow are now actively competing for top talent with well-established international financial centres like Shanghai, Geneva and Tokyo.

“All these global destinations are unique and differ from each other in terms of the lifestyle they offer and in terms of clients’ expectations, economic environments and regulatory conditions.

“With each of the top five cities offering unique opportunities and challenges, each one attracts grads who have often quite markedly different strengths and weaknesses, skill sets and aspirations,” notes Mr Green.

“The results of this survey suggest that despite the pandemic, talented young people seeking a rewarding career are keen to look for opportunities internationally.”

The deVere CEO concludes: “With a globally-focused outlook from the wealth advisers and fintech professionals of the future, we can expect this trend of emerging hub cities to take on stalwart destinations to continue for the foreseeable future.”

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Adesina, Godwin Emefiele, Others to Deliver Keynote Address at ASA 2020



Akinwumi Adesina

Adesina and Godwin Emefiele to Deliver Keynote Speech at Agriculture Summit Africa (ASA) 2020

The President of the African Development Bank (AfDB), President Dr. Akinwunmi Adesina, is expected to deliver the keynote address at the 2020 Agriculture Summit Africa (ASA) holding this week.

The yearly summit organised by Sterling Bank is titled ‘Fast forward agriculture: Exploiting the Next Revolution’ this year.

According to the organisers, participants were expected to log in online while a few others would be in Lagos and Abuja studios.

In a statement released on Tuesday, Yemi Odubiyi, the Executive Director of Corporate and Investment Banking, Sterling Bank said other dignitaries were expected to deliver goodwill messages at the summit.

Some of the names mentioned were the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele; Minister of Agriculture and Rural Development, Alhaji Muhammad Sabo Nanono; Cross River State Governor, Prof. Ben Ayade; his Kebbi counterpart, Senator Atiku Bagudu; and the Oniru of Iru Kingdom, Oba Abdulwasiu Omogbolahan Lawal.

Director, Advocacy and Country Alignment Function (ACAF), Director-General’s Office, International Institute of Tropical Agriculture (IITA), Dr. Kwasi Attah-Krah, is expected to deliver another keynote address on the second day.

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