Naira gained 0.55 percent on the US dollar week-on-week following renewed buying interest of foreign investors in Nigerian bond.
Reuters reports traders on Thursday to have said the naira, which was quoted at between 362.50 and 363 a week ago on the over-the-counter market, fell to 361 against the US dollar as foreign funds shrugged off the risk of forthcoming elections to buy government treasuries.
The increase in the inflow comes on the back of rising yields on Nigerian government securities, softening tones in the US-China trade war and the moderation of interest rates by the Federal Reserve.
The CBN has shown commitment to attracting foreign investors who pulled out of the domestic economy last year, as yields on the one-year Nigerian treasuries are up some 15 percent, luring investors back into the country despite the presidential elections holding in less than 10 days.
“There’s liquidity on the market,” a trader told Reuters.
“We have traded as low as 360.80 naira this week. Foreign investors are coming in. I don’t think they are as concerned with the elections or the premium on yield is good enough.”
Nnamdi Olisaeloka, Fixed Income analyst at Zedcrest explained that over the coming weeks, the naira would likely depreciate against the dollar marginally although renewed interest of foreign portfolio investors in the I&E market and sustained interventions of the CBN saw an appreciation of the naira last month.
“Even though the naira appreciated in other market segment, in the parallel market, naira depreciated slightly due to excessive demand,” Olisaeloka said.
“We expect that this would still pressure the rate marginally lower because of the demand for dollar both for speculative and electioneering purpose,” he said.
Olisaeloka also posited that fund investors might not be as aggressive this month as election concerns remain.
SEGUN ADAMS
