The Nigerian fixed income market is expected to witness a moderate activity as well as moderate liquidity during the new week. This is according to Nkem Azinge, a Currency Trader at UBA who spoke to CNBC Africa.
According to her, the market is expected to witness an OMO maturity during the week which, by the way, is going to be a short trading week due to public holidays on Monday and Tuesday. The OMO maturity will help maintain balance, even as liquidity in the system will just be moderate.
“Going into next week, there is an OMO maturity coming in. So, that will help to ensure balance. It is a short trading week. So, liquidity will just be moderate,” she said.
Earlier on during the interview, Azinge explained why there was also relative activity in the fixed income last week. According to her, the OMO market witnessed “buying activity as offshore players looked to deploy idle cash. We also saw banks buy as the market opened liquid.”
However, the trend reversed by Thursday because investors took advantage of lower yield in the market to “take profit in anticipation of the PRR debit that was expected” and CBN’s FX auction.
On the other hand, the bond market witnessed mixed sentiments last week. This is because while a number of people took profit on their auction, others sold off in anticipation of a possible increase in supply.
In the FX market, the CBN re-opened its whole bill auction by pumping as much as $72 million into the market. This helped to ensure liquidity in the market.
Azinge noted that it had been more than two months since such an auction occurred, a situation that led to very limited supply in the FX market. Therefore, the auction was a welcome development even as it indicated that the apex bank is now ready to meet growing dollar demands by Nigerians.
Note that the CBN’s Monetary Policy Committee (MPC) meeting is slated to take place on Thursday. This is also expected to influence activities in the fixed income market during the new week.
Watch Azinge’s entire interview with CNBC Africa by clicking here.