Nigeria (Common Wealth) _ The issuance of Nigeria’s dollar bonds increased on Monday, one day after Bola Tinubu, the country’s newly elected president, promised to harmonize the nation’s various interest rates.
In order to attract investors and reduce fuel subsidies, which have been eroding the government’s revenues for years, Mr. Tinubu pledges to make important monetary policy decisions.
According to Bloomberg, the price of 2047-dated eurobonds had increased 3.9% to 67.1 cents on the dollar as of 12:30 p.m. in London. Debts coming due in 2049 increased by 3.4%, while those in 2051 increased by 4%.
In his inauguration address on Monday, President Tinubu pledged that his administration will try to end Nigeria’s multiple exchange rate system, which has caused the gap between the official and parallel market rates to expand by as much as 60%.
Absa, a financial services company located in Johannesburg, predicted earlier this month that the president may permit a 15% devaluation of the native currency to reduce dollar shortages.
Absa anticipates that the action will increase the exchange rate from the Tuesday market close rate of N464.50 per dollar to 530/USD.
According to media sources that follow currency rates using Application Programming Interface, the dollar was traded for N751.19 on Tuesday in the black market.
The local currency hit record lows on the futures market, with the three-month forward trading at N564 to the dollar.
To lengthen maturities and increase the government’s local borrowing, the Debt Management Office announced on Tuesday that it will issue a new 30-year bond in June in its revised FGN bonds issuance calendar for this quarter.
According to analysis from South African firm ETM Analytics, eliminating subsidies will initially increase inflationary pressure in the continent’s largest economy but will ultimately promote growth and improve fiscal stability.
