[b] More Good News
The financial markets which have hitherto experienced tightness, pre-general elections concluded last week, began to ease following analysts’ and international positive reaction to the entire voting process.

The financial market reacted positively to the strength of the elections’ outcome with the naira firming up against the US dollar but with the inter-bank bond yields slowing down.

It is understood that the transparent nature of the election convinced the international rating agency - Fitch Ratings - to review and upgrade the country’s rating last week, a move that is certain to increase the country’s investment profile.

Wednesday last week, total demand for dollar dropped by 14.5 percent to $277.066 million, as against the $323 million total demand that was recorded the previous Wednesday. The banking watchdog also reduced its supply of the dollar at Thursday’s session by 37.5 percent.

The Central Bank of Nigeria (CBN) had offered a total of $250 million while the 18 banks that participated at the auction put up a total demand of $277.06 million.
The local currency was equally firm at other segments of the forex market. At the Bureau De Change (BDC) and parallel segments, the naira maintained its N156/$1 and N157/$1, respectively.

The Nigeria Inter-bank T-Bill True Yield Fixing (NITTY Yield Curve) declined in all tenors last Friday.

The one month NITTY declined by 0.18 percent to close at 5.5479 percent, while the two month NITTY went down 0.03 percent to close at 7.5742 percent, and the three month NITTY came down by 1.06 percent to close the week at 8.5464 percent.

All other tenor NITTY also fell last Friday. Wale Abe, chief executive officer of the Financial Market Dealers Association of Nigeria (FMDA) told BusinessDay that improved confidence in Nigeria could be seen in lowering demand for dollar.

He said demand for foreign exchange has gone down dramatically as pre-election capital flight has stopped. Abe traced the new trend to the country’s new risk profile which has improved tremendously and the new rating by Fitch.

Unegbu Okechukwu, former president of the Chartered Institute of Bankers of Nigeria (CIBN), believes the commendation by international observers alone is enough to bolster the confidence of both local and international observers.

He recalls that President Goodluck Jonathan promised credible elections and delivered. He has also delivered on his other promises and given investors confidence that he can be trusted by investors.

Unegbu said unlike what was done in the past, the country does not need to advertise before she attracts foreign investors. Investors will only come if they know you can be trusted.

He said it is not as if money has started pouring in, but those who were skeptical and held on to their money are beginning to come out of their shell.

Bismarck Rewane, chief executive of Financial Derivatives Company (FDC) believes that the liquidity surfeit that is being witnessed now is as a result of the Asset Management Corporation of Nigeria (AMCON) bonds which are being discounted.

He also said that bond yields are coming down as a result of the liquidity from AMCON.

Source: http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/20755-successful-general-polls-herald-improved-liquidity[/b]