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Treasury Newsletter – February 3, 2022

External Reserves Fall to $40.4 billion in January 2022 Nigeria’s foreign exchange reserve recorded a $481.4 million decline in the month of January 2022 to...

External Reserves Fall to $40.4 billion in January 2022

Nigeria’s foreign exchange reserve recorded a $481.4 million decline in the month of January 2022 to close at $40.04 billion, following the $66.17 million decline recorded in the previous month. This is according to data obtained from the Central Bank of Nigeria (CBN). Notably, foreign reserve fell by 1.2% in January 2022 compared to $40.52 billion recorded as of 31st December 2021.

Commodity Market

The price of paddy rice, sorghum, and cashew plunged on the AFEX Commodity Exchange last week by 2.47%, 0.18%, and 1.97% w-o-w (Week-On-Week) respectively. However, maize, soybean, and cocoa recorded marginal increases of 1.14%, 2.32%, and 1.10% w-o-w respectively, while other commodities remained unchanged. In the open market, sorghum reached a new high of 2.97%, which remained unchanged in the international market.

Treasury Bills

Last week, the Nigerian Treasury Bills (“NT-Bills”) secondary market started the week on a quiet note as investors anticipated the NT-Bills Primary Market Auction (“PMA”) which was conducted last week Wednesday (27-Jan-22). As the week progressed, the activity level rose due to improved liquidity (N453.6bn long as of Friday) and as lost PMA bids filtered into the secondary market. Consequently, the average yield in the market contracted 7bps W-o-W to close at 4.34% from 4.41% the previous week.

FGN Bonds

The FGN Bonds secondary market sustained its bullish sentiment last week as investors reinvested inflows from maturities on Jan-2022 bonds worth about 844.06bn. As a result, average yield in the market reduced 28bps W-o-W to close at 11.64% from 11.93% the previous week. Specifically, activities were mixed across the curve as the average yields on short- and medium-tenured maturities dipped 8bps and 26bps W-o-W respectively to close at 10.01% and 12.31% in that order.

FX Market

The exchange rate between the naira and the US dollar closed at N416.25/$1 at the official Investors and Exporters (I&E) window. Naira fell against the US dollar for the second day in a row on Wednesday with a 0.12% depreciation to close at N416.25/$1 compared to N415.75/$1 recorded as of the close of trading activities on Tuesday, 1st February 2022.

 

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