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Treasury Newsletter – October 8, 2021

FG Presents 2022 Budget of Economic Growth and Sustainability President Muhammadu Buhari on Thursday presented the 2022 National budget captioned “Budget of Economic Growth and...

FG Presents 2022 Budget of Economic Growth and Sustainability

President Muhammadu Buhari on Thursday presented the 2022 National budget captioned “Budget of Economic Growth and Sustainability” to the National Assembly, stating that it was a budget designed to build on the achievements of previous budgets and to deliver on the goals and aspirations to be reflected the soon-to-be launched National Development Plan of 2021 to 2025. With the parameters and fiscal assumptions set to include; Conservative oil price benchmark of 57 US Dollars per barrel; Daily oil production estimate of 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day).

Oil Price Watch

The crude oil market made a rebound on Thursday from the bearish trade recorded on Wednesday as the United State considered releasing oil from its strategic petroleum reserve. However, as the U.S Department of Energy walked back on the comments, oil prices had begun to record positive growth. Brent Crude gained 1.7% on Thursday to close at $82.46 per barrel, as WTI also gained 1.85% to close at $78.86 per barrel. In the same vein, the price of Natural Gas increased by 1.36% to close at $5.752 per barrel.

Treasury Bills

Last week, performance in the Nigerian Treasury Bills (“NT-Bills”) secondary market turned bullish post-auction, as investors’ unmet bids filtered in from the primary market. Consequently, average yields during the four-day week dipped 30bps W-o-W to settle at 5.29% from 5.61% the previous week. Specifically, most demand was recorded on the mid-tenored instruments that declined 85bps W-o-W as the 31-Mar-22 (-126bps W-o-W), 17-Mar-22 (-109bps W-o-W) and 10-Mar-22 (-100bps W-o-W) bills enjoyed the most buying interest.

FGN Bonds

The FGN bonds secondary market was mildly bullish last week, as pockets of demand were recorded across short-dated maturities. As a result, average yields across the curve dipped marginally by 3bps W-o-W to close at 11.20% from 11.23% the previous week. Particularly, the APR-23, JAN-22 and MAR-24 maturities enjoyed the most buying interest, moderating 45bps, 39bps and 32bps W-o-W respectively.

FX Market

Naira appreciated marginally against the US dollar on Thursday, for the first time this week to close at N414.67/$1, representing a 0.01% gain compared to N414.73/$1 recorded on Wednesday 6th October 2021. Similarly, according to information obtained by Nairametrics from BDC operators in Lagos the exchange rate at the parallel market gained on Thursday to close at N570/$1 compared to N575/$1 recorded in the previous day, representing an appreciation of 0.87%.

 

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