Nigeria dollar bonds accelerated on Monday, a day after newly inaugurated President Bola Tinubu vowed to harmonise the country’s multiple interest rates.
Mr Tinubu promises to take key monetary policy decisions in order to draw investors and end fuel subsidies which have eroded the government’s revenues for years.
Eurobonds, which have 2047 as their maturity, had risen 3.9 per cent to 67.1 cents on the dollar as of 12:30 p.m. in London, according to Bloomberg. Those due in 2049 added 3.4 per cent, while debts maturing in 2051 climbed 4 per cent.
President Tinubu said during his inaugural address on Monday his administration would work to abolish Nigeria’s multiple exchange rate regime, which has seen the differential between the official and the parallel market rates widen by as much 60 per cent.
Johannesburg-based financial services group Absa forecasted earlier this month the president could allow a weakening of the local currency by 15 per cent so as to curb dollar scarcity.
Absa expects the move to push the exchange rate to 530/USD, compared to N464.50, the rate at which it exchanged for the dollar at market close on Tuesday.
The greenback exchanged for N751.19 at the parallel market on Tuesday, according to @naira_rates, which tracks rates using Application Programming Interface.
On the forwards market, the local currency touched record lows against the dollar, the three-month forward exchanging at N564 to a dollar.
South Africa-based ETM Analytics said in a research note that scrapping subsidy will heighten inflationary pressure in Africa’s largest economy in the short term but will boost the economy and enhance fiscal stability in the long run.