Nigeria is re-emerging as an attractive destination for foreign investors following a rise in market interest rates and steps to clear the foreign exchange backlog, boosting confidence in broader FX reforms. The one-year OMO bill sold at 21%, double the return compared to the previous year. The yield on the one-year Treasury bill has also doubled. JP Morgan notes that the naira now ranks high on their risk-reward scorecard due to elevated carry. The clearing of the FX backlog is expected to further enhance investor sentiment and bring in new inflows.
Key Points:
- Nigeria’s rise in market interest rates is drawing foreign investors back to the country.
- One-year OMO bill sold at 21%, up from 12% in December 2022.
- Yield on the one-year Treasury bill has doubled to 13.5%.
- JP Morgan highlights the naira’s increased appeal on their risk-reward scorecard.
- The clearing of the FX backlog is a positive step for investor confidence and reforms.
- Nigeria aims to secure around $10 billion in new inflows to address the outstanding FX backlog.
Impact: The increase in market interest rates and progress in clearing the FX backlog signal positive developments for Nigeria’s investment landscape. This resurgence in foreign investor interest is a positive sign for the country’s economic recovery and could lead to increased capital inflows. It reflects growing confidence in Nigeria’s efforts to implement reforms and stabilize its financial markets.
