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Treasury Newsletter – May 7, 2021

Nigerian Naira Remains Fair Stable, But Downside Risk Abounds. CBN Replaces the Platform for The Processing of Electronic Certificate of Capital Importation, Crude Nears $70,...

Nigerian Naira Remains Fair Stable, But Downside Risk Abounds

Naira has remained stable over the past few weeks supported by the gains from higher crude prices (+3.40%MtD to US$68.32 bbl. as of the end of April). The impact of the higher crude prices can also be seen in the external reserves (+0.34%MtD to USD34.94bn), representing five months import cover. Crude oil prices are poised to remain at current levels, on the back of general compliance among OPEC+ members and recovery in global crude oil demand.

CBN Replaces the Platform for The Processing of Electronic Certificate of Capital Importation

The Central Bank of Nigeria (CBN) has announced the replacement of the platform for the processing of electronic Certificate of Capital Importation (eCCI). The now defunct eCCI platform, managed by Telnet Nigeria Limited in partnership with the CBN was launched in 2017 to enhance transparency and efficient processing of certificates in respect of foreign investment into Nigeria.  

Crude Nears $70, Raises Fear of Federation Account Depletion

The international oil benchmark, Brent Crude, was less than 30cents from hitting $70 amid market optimism on the United States and Europe reopening. The benchmark had gained $0.83, to trade at $69.71 as of 2:44 pm on Wednesday, Nigerian time, according to data from Oilprice.com. A rise in oil prices in the international market would result in increased importation costs for petroleum products.

Foreign Direct Investment declined by $30m in January

Foreign Direct Investment dipped by 33.3 per cent which amounted to $30m in January, latest statistics obtained from the Central Bank of Nigeria revealed on Wednesday. According to figures obtained from the CBN’s January report on capital importation and capital outflow, the FDI at $90m in December fell to $60m in January.

CBN Extends the Naira 4 Dollar Scheme for Diaspora Remittances Until Further Notice

The Central Bank of Nigeria (CBN) has extended indefinitely its Naira 4-dollar scheme for diaspora remittances which was introduced a few months ago. This is to sustain the foreign exchange market liquidity in Africa’s biggest economy which has been negatively impacted by the coronavirus pandemic and drop in oil revenue.

FX Market

The Naira on Thursday lost the 50kobo it gained against the Dollar on Wednesday at the Investors and Exporters (I&E) window of the foreign exchange market. Business Post reports that during the trading session, the local currency depreciated N411/$1 from the N410.50/$1 it finished at the midweek session.  

Treasury Bills

Last week, trading in the Nigerian Treasury Bills (“NT-Bills”) secondary market was relatively quiet as liquidity levels remained tight (N274.3bn short as at Monday, 26th April, 2021) and as investors stayed on side-lines, awaiting the Primary market Auction (“PMA”) that held on Wednesday, 28th April, 2021. Consequently, average yield closed flat at 4.74% despite the bond coupon payment inflow worth N53.0bn which was received during the week.

FGN Bonds

The FGN Bonds secondary market resumed last week on a calm note, however, mild sell-offs continued to push yields higher as the week progressed, furthering its bearish run for another week. Consequently, average yield across all maturities advanced 28bps Week-on-Week (W-o-W) to settle at 11.93% from 11.45% the previous week.

 

Read the full report below.

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