Nigeria’s dollar bonds rose on Monday after Friday’s suspension of Central Bank of Nigeria governor, Godwin Emefiele.

The 10-year dollar-denominated bonds or Eurobonds surged 2.6 cents before falling slightly.

The debt maturing in 2051 saw the biggest gain, rising 2.327 cents to 72.526 cents a unit at 0829 GMT, according to Tradeweb data cited by Reuters.

The premium investors demand to hold Nigerian debt over US debt fell 46 basis points to 710, the biggest drop this year, Bloomberg aslo reported citing JPMorgan index.

Mr Emefiele who was suspended by President Bola Tinubu after the markets closed on Friday. The State Security Service said on Saturday he was detained for unexplained “investigative reasons.” Folashodun Shonubi, a deputy governor in charge of operations at the bank, took over in an acting capacity.

– Why this matters

The performance of the bonds is a sign that international investors welcomed the removal of Mr Emefiele whose monetary policies, including the use of multiple exchange rates, were well criticized.

Nigeria faces severe dollar shortages and for foreign investors, a multiple-exchange rate policy means it could be difficult to get invested dollars back, a problem for foreign direct investment.

The International Monetary Fund has cited central bank interventions in Nigeria’s foreign-exchange market as a hindrance to capital inflows. Nigeria’s FDI fell 52% to $698 million in the six years through 2021.

Mr Emefiele’s central bank also handed the government of former President Muhammadu Buhari N22.7 trillion naira ($49 billion), helping to push public debt to a record N77 trillion. Lenders are also wary of governments that are heavily indebted.

President Tinubu has said his government will unify the exchange rates to allow naira trade freely. Wale Edun, speculated to be named CBN governor under the new government, told Bloomberg Monday that the unification will happen soon, likely within the next quarter.

– What analysts think

“This could spell the end of unorthodox and often conflicting and confusing monetary policies that held back economic growth and destroyed local and foreign investor confidence,” Ayodeji Dawodu, head of Africa sovereign and corporate credit research at BancTrust & Co. in London, told Bloomberg.

Barclays economist Michael Kafe said in a note to clients on Monday that, “We believe the changes signal a new era of focused, predictable monetary policy and a shift towards non-interventionism in the foreign-exchange regime.”

“The markets will respond positively to an administration it believes to be more market oriented,” Yemi Kale, chief economist for Nigeria at KPMG LLP and former statistician general, told said.

– Bonds? What it all means Nigerians?

When a country’s dollar bonds go up, it means the value of those bonds has increased. But what does that really mean for Nigeria and Nigerians and why is it important? Let’s start with what a bond is.

A bond is a type of investment where an investor lends money to a government or a company in exchange for periodic in https://pluboard.com/2023/06/12/economy/nigerias-eurobonds-up-after-emefieles-removal-heres-what-it-means/