Naira strengthens against Dollar as equities market turns positive

Nigeria’s local currency, the Naira appreciated against the Dollar by 0.01% and 0.28% to NGN360.25 and NGN362 in the I&E FX window and parallel market respectively on Tuesday, 20^th of February.

Total turnover in the I&E FX window declined by 8.94% to USD164.83 million, and traded within the range of NGN358.00 and NGN361.50.

The overnight lending rate dropped by 675 bps to 19.92%, following anticipation of Thursday’s inflow via maturing OMO bills worth NGN56.43 billion.

Investors were upbeat in the NTB market, as average yield declined by 12 bps to 14.42%. Yields fell across all ends of the curve – short (-29 bps), mid (-4 bps), and long (-5 bps) ends, owing to interests in the 16DTM (-116 bps), 163DTM (-23 bps) bills, and 191DTM (-33 bps) bills respectively.

Meanwhile, equities market turned positive, with the ASI appreciating by 0.38% to 42,148.40 points, following renewed interest in DANGCEM shares.

Accordingly, the Month-to-Date and Year-to-Date returns improved to -4.95% and 10.21% respectively.

Among sectors, the Industrial Goods (+1.58%) index was the sole gainer, driven by demand for DANGCEM (+3.46%) shares. On the flip side, the Oil & Gas (-1.31%), Banking (-1.03%), Insurance (-0.41%), and Consumer Goods (-0.07%) indices closed in the red, as investors took profit in the shares of TOTAL (-4.98%), FBNH (-7.26%), WAPIC (-4.62%), and NB (-0.70%) respectively.

However, market breadth remained negative with 37 losers and 18 gainers, led by CONOIL (-9.67%) and PZ (+5.00%). Total volume traded increased by 77.69% to 510.28 million, valued at NGN4.63 billion, and exchanged in 5,757 deals.

It is likely gains persist in the equities market, as we look to investors taking position ahead of Q4-17 corporate releases, amidst strengthening macroeconomic fundamentals.

Similarly, proceedings turned bullish in the bond market, as average yield declined marginally by less than 1 bp to 13.63 bps. Yield contraction at the short (-9 bps) and mid (-3 bps) ends of the curve outweighed expansion at the long (+2 bps) segment.

The notable bonds include the JUN-2019 (-9 bps), FEB-2020 (-17 bps), and APR-2037 (+12 bps) respectively. Meanwhile, at tomorrow’s bond auction, the DMO will offer NGN50 billion apiece of the 14.50% FGN JUL 2021 (in reopening) and FGN FEB 2028 (new issue) bonds.