Buhari: Naira Firms To 190 As Capital Market Gains

imageThe ailing Nigerian currency,the naira, has further firmed up to the greenback as it now trades at N190 to one US dollar at the parralle market.

The all share index was bouyed to its biggest daily gain post independence last week, while bond yields dropped as investors reacted positively to General Muhammadu Buhari’s victory in the March 28 presidential election in which incumbent President Goodluck Jonathan lost.

The main shares index closed 8.3 per cent higher at a near three-month high in the week under review as markets in Africa’s biggest economy welcomed the outcome of the closely-fought vote.

“The peaceful conclusion of the election has allayed the fears of foreign investors about the market,” Ayodeji Ebo, head of research at Afrinvest told Reuters, referring to the bourse.

He said most listed firms, especially banks, were trading at a discount to their true value, attracting foreign investors.

“Investors were waiting on the sidelines to see election concluded in a peaceful manner. So everyone is taking positions now while those that are in are not willing to sell,” Ebo said.

Foreign investors fled Nigerian markets starting late last year, unnerved by political uncertainty before the vote as well as the sharp fall in the global price of oil, which weakened the currency, triggering devaluation in November.

The stock index crossed the psychologically important 34,000-point level to stand at 34,392 points, extending gains to a ninth consecutive session — its longest winning streak this year — as President Goodluck Jonathan accepted his defeat.

The naira gained 0.46 per cent to 217 against the dollar on the parallel market, a black market dealer said.

The currency traded at 197 naira to the dollar on the interbank market, a level it has traded at since February, after the central bank pegged the rate in a de facto devaluation.

Yields on sovereign naira bonds fell sharply, with the five-year bond down 101 basis points.

Nigeria’s economy has been growing by about 7 per cent, but billions of dollars in missing oil receipts and the Boko Haram insurgency that has killed thousands helped to undermine Jonathan’s popularity, analysts said.

Some analysts said the market rally would be punctured by harsh realities that have blighted economic growth.

“Market will rally on the back of elections but after that investors will wake up to the reality that the government needs to borrow more to fund its current account, which means bond yields will have to rise long-term,” a dealer at a major bank told Reuters.

Nigerian dollar-denominated bonds issued by the government and banks rose for a second straight day, with sovereign issues hitting their highest levels since mid-December.

Source: Upshot Reports

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