‘Increased FPI Inflows Sustain Naira Appreciation’

• ‘Increased FPI Inflows Sustain Naira Appreciation’

Analysts at Zedcrest Capital Limited have said the naira appreciated significantly in the Investors’ and Exporters’ foreign exchange window by about 0.50 per cent to N360.99/$ from N363/$ at the end of February, following increased inflows from Foreign Portfolio Investors.

Zedcrest, in its monthly market review, said the total market turnover totalling $6.7bn was about 43 per cent higher than the $4.7bn total turnover recorded in January, with the FPIs responsible for about 59 per cent of the total inflows into the market in February.

The naira, however, remained relatively stable at N358/$ and N365/$ at the parallel market and Bureau de Change segments, respectively, despite having weakened slightly in the build up to the general elections.

The Central Bank of Nigeria’s official spot rate, however, weakened by 0.03 per cent month-on-month to N306.85/$ as of February 28, 2019.

The analysts said investors sustained interest in Nigerian Eurobonds as election risks cleared.

The Nigerian Sovereign Eurobonds remained largely bullish in February but with demand less aggressive than the rate witnessed in the previous month where market players reacted to the dovish turn by the United States Federal Reserve System and improvements in trade talks between the US and China, they said.

The report read in part, “Market players were positively disposed to the Nigerian Eurobonds as political risks cleared following a relatively peaceful conclusion of the much-anticipated general elections.

“Yields were consequently lower by c.35 basis points, with an average of c.6.87 per cent as of February 28, having already declined by c.110bps to c.7.22 per cent in the month of January.”

In the Nigerian corporate Eurobonds space, investors remained mildly bullish, with sustained demand witnessed on the Fidelity Bank 22s and Zenith Bank 22s.

Investors, however, turned bearish on the Access Bank 2021 senior bond, which rose by 36bps month-on-month, even as demand interests waned on the Diamond Bank 19s as it edged closer to its maturity date (21-May-19).

Bond yields declined by 100bps in post-election rally.