Nigeria has hired investment banks including Citibank NA, JPMorgan Chase & Co. and Goldman Sachs Group Inc. to advise it on its first eurobond issue since 2022.
The size of the eurobond offer which is expected before June, is yet to be determined, “the people who requested anonymity because they weren’t authorized to comment publicly on the matter”, said Bloomberg in a report.
Nigeria is likely to raise as much as $1 billion in external borrowing this year to meet its spending needs, they said.
Foreign investors will need more convincing that Nigeria is finally ditching the controls that have for long distorted its currency market, making the country of 200 million people less attractive to foreign capital.
Nigeria’s central bank announced a supersized 400-basis-point rate hike in the fight against inflation and its depreciating currency.
“Hard to say if this move will stop the Naira’s depreciation,” reads a report from Bloomberg.
Also Read: Nigeria’s Fight Against Naira Shortage Risky as Currency Devalued 38%
Since January 2022, it has declined by 74% against the US dollar.
Naira’s Woes Persist
On Wednesday, the official market witnessed a slight depreciation in the Naira-dollar exchange rate, closing at N1,615.94 to $1, a 0.78% decrease from the previous rate of N1,603.38 to $1.
Following the naira’s devaluation against the dollar, the Central Bank of Nigeria (CBN) adjusted the customs clearance exchange rate at seaports from N1,593.9/$1 to N1,624.7/$1 on March 12, 2024.
The recent dip in the naira-dollar closing rate halted a two-day streak of gains but remained above the N1,600 to $1 threshold since the previous Tuesday.
Data from Nigerian Autonomous Foreign Exchange Market (NAFEM) also revealed a substantial surge in forex transactions by 103.59%, amounting to $248.75 million compared to $122.18 million recorded previously.
What Policymakers Are Saying
Other African countries have had a rough go over the past two years. The Ghanaian cedi, Kenyan shilling and South African rand are all down over the same period.
Africa’s rapidly depreciating currencies are eroding households’ savings, increasing costs for businesses and deterring long-term foreign investment at a time when the region’s economies are seriously struggling.
For policymakers, the only sustainable interventions ought to be aggressive export promotion and free floats to let markets determine currency price levels.
