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Treasury Newsletter – June 18, 2021

Nigeria’s inflation rate drops further to 17.93% in May 2021 According to the Consumer Price Index report (CPI), recently released by the National Bureau of...

Nigeria’s inflation rate drops further to 17.93% in May 2021

According to the Consumer Price Index report (CPI), recently released by the National Bureau of Statistics (NBS), Nigeria’s inflation rate dropped further for the second consecutive month to stand at 17.93% in May 2021 from 18.12% recorded in April 2021. The report which measures the inflation rate revealed an increase of 17.93% (year-on-year) in May 2021 i.e.  0.19% which shows points lower than the rate recorded in April 2021 (18.12%).

Oil prices surge to its highest since 2019 Amidst Increased Demand

Over the past few months, the oil market has been on a bull run, which has seen oil trade near levels not seen in recent years(doesn’t make sense). On Wednesday, oil extended its gain climbing towards $75 a barrel to its highest since April 2019, on the back of a recovery in demand since the pandemic and a drop in U.S. crude inventories. Brent crude went up 0.16% on Wednesday to trade at $74.11 a barrel.

FGN Bonds

The FGN bond market witnessed a major short squeeze on selected bond papers due to persistent short-covering by traders, which triggered a rally across the entire bond yield curve. The 2045s saw the largest movement in yield terms as bids dropped to the sub 13% level at the early hours of trading with desperate buyers scrambling to lift any available offer in the market.

Treasury Bills

The T-bills market opened the day with a demand rush for the new 364 days NTB as local investors defaulted to the secondary market to cover their lost bids.  Most of the trades on the 364days paper crossed at 8.90% and eventually closed the day at 8.60% levels on the offer.

Money Markets

Money market rates trended upward by another 238bps on Thursday, as system liquidity remained negative for a second consecutive session opening the day at -N66.38B, 27% lower compared to yesterday’s open. Naira dealers continue to scramble for funds in the interbank market by increasing deposit rates to attract local investors, alternatively staying camped at the Standing Lending Facility (SLF) space.

FX Market

Naira appreciated on Thursday against the US dollar to close at N411.5 to a dollar compared to N412/$1 recorded on Wednesday, 16th June 2021. The exchange rate also gained at the parallel market to close at N493/$1 compared to N502/$1 recorded on Wednesday. This represents a N9 gain in a single day, and it traded for as much as N485/$1 during intra-day trading.

 

Read the full report below…

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