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Nigeria’s naira movement against dollar continued on the positive trends, appreciating marginally at both the parallel market and the official window.
Naira gained 0.02 percent against the dollar, closing at N413.18/$1 on Wednesday, up from N413.28/$1 on Tuesday, September 21, 2021.
The foreign exchange market turnover also rose by 14.49 percent to $229.72 million on Wednesday, up from $200.65 million on Tuesday, according to statistics obtained from FMDQ.
Similarly, the parallel market or black market exchange rate appreciated to N572/$1 on Wednesday, up from N575/$1 the day before, according to data obtained from licensed BDC operators in Lagos.
This development is coming barely 24 hours after the country raised $4 billion through Eurobonds.
iBrandTV gathered that this is the major financial trade coming out of the continent this year, and it was issued in three tranches.
According to the Debt DMO, the Order Book peaked at $12.2 billion which enabled the FGN to raise $1 billion more than the $3 billion it initially announced.
The long tenors of the Eurobonds and the spread across different maturities are well aligned with Nigeria’s Debt Management Strategy, 2020 – 2023.
The mobilization of $4 billion through Eurobonds, which was part of the New External Borrowing in the 2021 Appropriation Act, provides a considerable amount of capital to finance projects in the Act, thereby helping the implementation of the Act, according to the DMO.
Although, some analysts believe that the marginal gains of the Naira were caused by the FG’s success in the bond market. Others hold that the gains are too small to strengthen the Naira in the long run.
According to Dumebi Udegbunam, Fixed Income trader at United Bank for Africa (UBA) postulated that ”the appreciation we are currently witnessing is based on sentiments.”
He also affirmed that there is a growing appetite for Nigerian debt saying, “The Euro bond auction showed an exceptional performance with it being oversubscribed by 400% allowing the DMO raise an extra $1 billion. This simply shows that market participants especially foreign investors are optimistic of the growth outlook and investment fundamentals of Nigeria.”
He pointed out the need for the government to tread carefully when accumulating debt saying, “Despite the impressive performance, the government needs to be very cautious of its debts servicing and also debt sustainability. To avoid creating a debt trap scenario despite having positive fundamentals.”