Naira Firms On Offshore Funds Inflow

Having closed flat at the beginning of the week, the
naira closed higher yesterday at the interbank
market as offshore funds aimed at the Nigerian
bond auction flowed into the market.
The naira closed at 157.65 to the dollar as against
157.75 which it closed on Monday, following the
inflow of foreign funds and a $57.5 million sale by
ExxonMobil to some banks.
Dealers said they were optimistic that the naira
would remain firm with more foreign funds inflow
expected as offshore funds meant for Nigeria’s debt
instruments.
Dealers said the inclusion of Nigeria’s debt in the JP
Morgan emerging market government bond index
from October saw foreign investors pump in dollars
to buy treasury bills.
A dealer at Standard Chartered Bank who spoke
with Reuters said dollar inflows have risen in recent
months helping to sustain demand, just as he
added that, “sentiment is high and we see the naira
gaining further this week or at least remaining
stable.”
A report by Ecobank Transnational Incorporated
analysts, led by Paul-Harry Aithnard in Paris stated
that “An important recent development in
strengthening naira sentiment was the decision by
JP Morgan to include Nigerian government bonds in
its Emerging Market Government Bond Index. It will
help increase demand for naira as funds that track
the index seek to buy Nigerian government
securities in order to maintain their replication of
the index.”
The yield on Nigeria’s seven per cent domestic
bonds due June 2019 rose seven basis points to
12.61 per cent, according to data on the Financial
Markets Dealers Association website. Yields on the
nation’s $500 million of Eurobonds due January
2021 were little changed at 4.78 per cent.