System liquidity weakened over the week declining to N3.35 trn last weekend

Coronation Merchant Bank has said that system liquidity weakened over the week, opening at N4.02 trillion and declining to N3.35 trillion by the end of the week.

Coronation in a note to investors on last week financial market status said on Monday that “the OPR and O/N rates remained flat at 22.50 per cent and 22.75 per cent, respectively.

“In the OMO auction held last week total subscriptions printed at N1.33trn versus N600bn on offer, with demand largely concentrated on the longer-dated 210-day paper. Total sale was N1.27trn reinforcing its intent to mop up excess liquidity.

“Clearing rates for the 168-day was 19.35% and for the 210-day paper was 19.41% reflecting investors ‘desire to lock in attractive carry into year-end. Bid to cover ratio was 1.61x and 1.02x on both tenors. Average yields in the Nigeria

“Treasury bills market declined by 8 bps to 17.71%, while Open Market Operation (OMO) yields saw a decrease of 32 bps to 21.82%. Average yields in the FGN bond market were down by 10 bps to 16.55%. The Eurobond yields dipped by 1bp to 7.03%.

“The decline in yields across all fixed income instruments suggests a strong demand for fixed income securities in the market as a result of the strong liquidity in the system.

“The Nigerian equities market extended its bullish momentum last week, closing the session on a positive note as the All-Share Index (ASI) advanced by 1.92% w/w to settle at 156,492.36 points. Market capitalisation also closed higher, rising by N2.05trn w/w to N99.38trn.

“Over the week, gains in BUA Foods (+6.80% w/w), Aradel Holdings (+5.94% w/w), and MTN Nigeria (+1.39% w/w) were the primary drivers of market performance, more than offsetting losses in Seplat Energy (-3.43% w/w), First Holdco (-7.92% w/w), and Nigerian Breweries (-5.73% w/w).

“Sectoral performance was largely positive. The NGX Insurance Index led gains, rising by 5.93% w/w, followed by the NGX Consumer Goods Index (+3.44% w/w), NGX Banking Index (+2.96% w/w), and NGX Pension Index (+2.28% w/w).

“Meanwhile, the NGX 30 Index gained 1.85% w/w, the NGX Oil and Gas Index added 1.16% w/w, and the NGX Industrial Goods Index advanced by 0.82% w/w. We expect positive sentiment to persist in the near term as the new year opens, supported by portfolio rebalancing, bargain hunting in fundamentally strong names, and

continued positioning ahead of full-year earnings releases and dividend announcements.

“The global crude oil market closed the final trading week of 2025 on a weaker footing, as major benchmarks recorded weekly losses amid persistent bearish sentiment. Brent crude opened the week at $61.94 per barrel and declined by 1.92% to close at $60.75, extending its broader downward trend toward year-end.

“Price action during the week reflected continued caution among market

participants, following a year marked by significant declines across the crude complex. Market sentiment remained pressured by ongoing concerns around global supply balances, with reports continuing to highlight expectations of ample supply heading into 2026. 

“While geopolitical developments including tensions affecting key producing regions remained part of the broader market narrative, they were insufficient to materially alter the prevailing bearish tone. As a result, crude prices struggled to find sustained upward momentum over the course of the week.

“Atlantic Basin grades mirrored the broader market direction. Nigeria’s Bonny Light crude declined by 1.81% w/w, closing at $63.42 per barrel from an opening price of $64.59. Despite the weekly decline, Bonny Light maintained a premium of $2.67 to the Brent benchmark.

“Overall, crude oil prices ended 2025 significantly below levels seen earlier in the year, underscoring the challenging price environment that characterised the market. The final week’s performance reinforced the dominant influence of supply-side concerns and cautious sentiment as the market transitioned into the new year.

“Looking ahead, market direction will be guided by incoming supply and inventory data, official guidance from major producers, and developments in key geopolitical regions, as participants assess how global supply conditions will evolve into early 2026.

“The Naira began the year with a mixed performance across FX markets. At the official window, the currency strengthened marginally against the US Dollar, closing at N1,430.85/US$, representing 0.88% w/w appreciation. This improvement was largely supported by sustained CBN supply into the foreign exchange market. 

“In contrast, the parallel market rate weakened to N1,490/US$1 (-1.01% w/w), reflecting persistent FX demand pressures outside the official window. FX inflow into the NAFEM window declined by 20.67% w/w to $593.70m from $748.40m in the prior week. The slowdown reflects softer market activity at the start of the year, as well as reduced participation from offshore investors. 

“Local sources remained the dominant contributors (accounting for 82.95% of the total FX inflow), These were led by Individuals (US$165.1m), followed by the CBN ($128.00m) and exporters/importers (US$115.6m).

On the external front, “FX inflow slowed further (contributing just 17.05% of the total FX inflow), Notably, both foreign direct investments (FDIs) and foreign portfolio investments (FPIs) weakened sharply on a weekly basis”. 

“FPIs declined by 72.91% w/w to US$46.00m, from US$169.8m, in the previous week, while FDIs fell 81.87% to US$7.00m from US$38.60m previously”.

Meanwhile, the CBN’s gross foreign exchange reserves rose slightly by 0.58% to $45.50bn, adding $264.56m at the start of the year. In the near term, the naira is expected to trade within a relatively stable range at the official window, supported by CBN intervention and seasonal easing in FX demand following year-end pressures.