Despite the approaching elections, which has seen foreign portfolio investors exit Nigeria, some others apparently hold a contrarian view.
Sources familiar with the transaction, revealed $1 billion in fresh funds was channeled to buying treasury bills last week.
Business as usual
While foreign portfolio investors holding equities may have largely pulled out, regardless of who wins the elections, the country remains in dire need of funds.
Policy direction especially at the CBN would be difficult to change. Even in the event of a current Governor Godwin Emefiele not getting a second term, the apex bank has prioritized tight liquidity and a stable exchange rate.
Rising interest rates in advanced markets mean further Eurobond sales are not an attractive option.
At the first monetary policy committee meeting held this week, the committee voted to keep rates unchanged.
In the communique, the MPC noted that
In the light of the observed risk confronting the economy, including the global and domestic inflationary pressures, which have intensified the risk of currency depreciation, the MPC was of the view that a loosening option was very remote. Weighing the balance of its judgement on price stability conducive to growth, the MPC felt that tightening would result in the loss of the gains so far achieved, noting that this may drive the banks to reprice their assets; thus increasing the cost of credit as well as elevating credit risk in the economy.
Yields on treasury bills have however continued to rise with yields on the one year bill hitting 15% at the last auction. In the event of a further uptick in inflation or pressure on crude oil prices, the apex bank could decide to maintain foreign investor interest, by hiking the yields on treasury bills.