The value of the naira recorded its highest gain in nearly two months, appreciating by 4.8% against the US dollar after the successful sale of Nigeria’s debut domestic dollar bond. This marked the naira’s biggest jump since July 22, with the currency closing at 1,558 naira per dollar on Wednesday, its strongest level against the greenback since August 21.
The appreciation followed Nigeria’s announcement that its first-ever foreign-currency domestic bond attracted significant demand, securing $900 million in subscriptions. The bond sale has been seen as a major boost to investor confidence, contributing to the naira’s rebound in the foreign exchange market.
Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, confirmed that the $500 million domestic FGN US Dollar Bond, with a five-year maturity and a 9.75% coupon, is the first tranche of a $2 billion bond programme registered with the Securities and Exchange Commission. The structure of the bond allows the government to absorb oversubscriptions, up to the full $2 billion programme limit.
Edun noted that proceeds from the bond will be directed towards critical sectors of the economy, as approved by President Bola Ahmed Tinubu, and described the success of the issuance as a key milestone in Nigeria’s ongoing efforts to promote financial inclusion and foster economic growth.
The bond sale attracted a diverse range of investors, including local and diaspora Nigerians, as well as institutional investors, marking a significant step in deepening Nigeria’s financial market.
According to Bloomberg, the bond’s success played a crucial role in boosting investor sentiment, contributing to the naira’s recent strength against the dollar.
This development follows weeks of volatility in the foreign exchange market, with the naira previously weakening to as low as 1,600 per dollar in the parallel market. The currency’s recovery is expected to have a positive impact on investor confidence and economic stability in the coming months.
