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Nigeria’s Dollar Bonds Rally on Move to Introduce New FX Rules
November 1, 2023
Nigeria’s dollar bonds were up by over 1.5-2 points across the curve after a top official said that they were planning to introduce new foreign exchange rules, including a crackdown on illegal currency trading. He said that the move should hopefully see the naira closing its near-45% gap with the black market rate and reach a “fair price” by end-2023. He said that the plan included clearing an estimated $6.7bn backlog of dollar demand, bolster the naira forward market, and set transparent rules for operating the official forex market. He added that the government saw a fair price for the USDNGN rate at 650-750 vs. the current 802.6 in the official market. However, the naira trades at 1,165 in the black market. This adds to the positive news last week where the Finance Minister said that the nation expected to receive $10bn of inflows in the coming weeks. This would further help ease the liquidity crunch on the naira given the dollar shortage and falling forex reserves.
Nigeria’s 7.375% 2033s were up 1.6 points to trade at 75.2, yielding 11.7%.
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