POLITICS TODAY

Nigerian Political News Media
Foreign Investors Flock to Naira Assets as Yields Surge
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By Nasir Dambatta

Nigeria’s recent economic reforms have significantly boosted foreign investor interest in naira-denominated assets. The Central Bank of Nigeria (CBN), under Governor Olayemi Cardoso, has implemented measures to enhance transparency in the foreign exchange market and increase interest rates on treasury bills. These initiatives have attracted substantial dollar inflows, contributing to the naira’s stabilization.

A senior official from a prominent international bank with extensive African investments emphasized this renewed confidence, stating, “Sell everything and buy Nigeria, everything.” This sentiment reflects the growing optimism among foreign investors toward Nigerian markets.

The CBN’s introduction of the Electronic Foreign Exchange Matching System (EFEMS) in December has led to more transparent dollar pricing. Additionally, the removal of transaction caps for International Money Transfer Operators (IMTOs) has encouraged increased diaspora remittances. These actions have collectively reduced naira volatility, making Nigerian securities more appealing to international investors.

The naira recently reached an eight-month high of 1,474.78 per U.S. dollar in the official foreign exchange market. Concurrently, the yield on one-year treasury bills has risen to 27%, with seven- and ten-year bonds yielding around 22.5% at a recent auction. Analysts anticipate this upward trend to persist in the first half of the year.

A J.P. Morgan report titled “Emerging Market Frontier Local Markets Compass” highlighted Nigeria’s progress, noting, “We stay long Nigeria T-bills, as reform momentum has started to bear fruit.” The report also recognized the naira as one of the top performers among frontier markets this year.

These developments have led to speculation about Nigeria’s potential readmission into the J.P. Morgan Government Bond Index for Emerging Markets (GBI-EM), which could further enhance the country’s appeal to foreign investors.


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