In a bid to bolster its foreign exchange reserves and stabilize the national currency, the Federal Government of Nigeria has announced plans to introduce domestic bonds denominated in foreign currency. The issuance is slated to commence in the second quarter of this year, specifically in June, according to a report by Reuters.
The revelation was made by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during a meeting with business leaders held in Lagos. Edun emphasized that the move is part of the government’s strategy to attract additional foreign exchange inflows and address the persistent scarcity of US dollars in the Nigerian economy.
The scarcity of US dollars has significantly contributed to the depreciation of the naira currency in recent times. However, with the implementation of new foreign exchange reforms by both the Central Bank and the Federal Government, the naira has shown signs of recovery. Currently, it is reported to be exchanging at N1,255/$, marking an improvement over the past two months.
During the meeting with business leaders, Edun highlighted the government’s intention to sell forex bonds to both domestic and international investors. He particularly emphasized targeting Nigerians who have opted to hold and save their funds in dollars due to a lack of confidence in the local currency. He stated, “All the funds in the diaspora, we are targeting them. There are all these funds that you have brought into your (local foreign currency) accounts, we are targeting them.”
The introduction of foreign currency-denominated bonds is expected to provide an avenue for investors to diversify their portfolios and hedge against currency risks. Additionally, it will facilitate the inflow of foreign exchange into the Nigerian economy, thereby enhancing liquidity and supporting the stability of the national currency.
As the Federal Government gears up for the issuance of these bonds, it underscores its commitment to implementing measures aimed at fostering economic growth and resilience amid prevailing challenges.
