Market News

The IMF said the Naira’s stability comes against the backdrop of the clearing of the foreign exchange backlog by the Central Bank of Nigeria (CBN) and interest rate hikes.

by Oladeinde Olawoyin

The International Monetary Fund (IMF) on Tuesday said the Naira is showing signs of stability due to the policies of the Central Bank of Nigeria.

The Washington-based institution made this known in its global financial stability report launched during a press briefing at the ongoing World Bank/IMF meetings holding in Washington DC.

The IMF said the currency’s stability comes against the backdrop of the clearing of the foreign exchange backlog by the Central Bank of Nigeria (CBN) and interest rate hikes.

“Policy actions by local authorities have also resulted in positive developments; for example, in Nigeria, rate hikes and the clearing of overdue domestic central bank foreign exchange obligations have helped the naira show more signs of stability,” the report said.

The CBN has, in recent months, hiked rates as part of measures to contain inflation and stabilise the economy.

The apex bank has equally cleared backlogs of foreign exchange payments to airlines, amid other obligations.

Frontier Economy

The IMF said frontier sovereign spreads have followed global trends and tightened further in the second quarter, having approached long-term average levels.

Significant progress on debt restructuring has also helped lift investor sentiment toward frontier markets, it said.

“For example, the Eurobond restructurings in Suriname, Zambia and Ghana were completed in December, June, and October, respectively, while an agreement in principle was reached with creditors in Sri Lanka in September.

“Against this backdrop, frontier economies continues to issue international debt in the second quarter, although yields remained high. Some frontier economies and low-income countries took advantage of strong investor risk appetite to issue sovereign bonds after a lengthy hiatus.“