Nigeria US Dollar Bonds Rally Despite Sell Order for Banks

Nigeria’s sovereign Eurobonds, or US dollar bonds rallied in the international market despite an industry wide foreign currency asset sell down directive by the apex Bank.

Consequently, the average yield jerked down slightly as the authority planned external capital raise to fund its budget deficits.   Just recently, the Central Bank of Nigeria (CBN) asked banks to cut down foreign assets holdings amidst currency pressure. Government reforms have triggered some policy adjustments.

This has been targeted at improving overall economic performance and growth outlook in Africa’s largest economy by the size of its gross domestic products estimated at $500 billion.

Following the directive, traders and market analysts predicted that yield on the US dollar assets would increase significantly due to the level of holdings by big banks in the country.

However, in the international market for Nigeria’s sovereign US dollar bonds; prices increase due to demand. Buy sentiment was evident across all ends of the yield curve, leading to a decline in the average yield by 4 basis points to 9.78%, according to Cowry Asset Limited.

Lawmakers have launched a plan to probe banks that failed to meet the 24-hour direction on reducing net open positions for commercial banks in Nigeria.

Elsewhere, the US Federal Reserve held its ground on monetary policy, opting to keep interest rates unchanged, affirming its commitment to a tight stance.

Despite maintaining the status quo, the Fed signalled its intentions for continued tightening throughout 2024, indicating a proactive approach to managing inflation and economic stability.

Last month, Eurozone inflation decreased more than anticipated, dropping to 2.8% year-over-year. This decline from the previous month’s rate of 2.9% suggests a slight moderation in price pressures across the Eurozone. #Nigeria US Dollar Bonds Rally Despite Sell Order for Banks#

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