The naira continues to gain on the parallel market

As the Naira continues to gain strength on the parallel market, investors and analysts are closely monitoring the developments in Nigeria's fixed income and forex markets. Tosin Osunkoya, Co-Managing Partner at Commercio Partners, provided insights into the current trend in a recent interview on CNBC Africa. Osunkoya highlighted the positive impact of the Investors and Exporters window, which has attracted nearly $2 billion into the country. This influx of foreign exchange has also influenced the equity and debt capital markets positively, leading to some convergence between the parallel market and the investors' window. The Naira is currently trading around 367-368 against the US dollar on the parallel market, showing signs of further strengthening. Osunkoya expressed optimism about the Naira's resilience, despite concerns about its sustainability due to fluctuations in oil prices, which serve as a key determinant of the country's foreign exchange reserves. On the supply side, Osunkoya mentioned a shift from sole dependence on the central bank for dollar inflow to additional sources like foreign investors, driven by the performance of crude oil prices. Looking ahead, Osunkoya emphasized the importance of a free and efficient forex market without undue intervention, encouraging the return of foreign portfolio and long-term investors to further stabilize the market. However, Osunkoya noted that the bond market has faced challenges amid uncertainty, with limited local liquidity and high funding costs deterring investors from active participation. Despite a reduction in inflation rates, the bond market remains subdued, reflecting a cautious sentiment among market participants.