..As Naira plunges by 18% at investors’ FX window
The Lagos State Government said that it has redeemed N57.5 billion ($183 million) worth of local currency bonds it issued seven years ago.
Finance Commissioner, Akinwunmi Ashade, said the state was paying off its debts to create space for new issuance to raise funds for infrastructure investment.
He said the state had saved more than N103 billion in a sinking fund to redeem bonds maturing in 2019, 2020 and 2023.
The commercial hub which accounts for around a third of Nigeria’s economic output, sold the bonds in 2010 to fund badly-needed infrastructure projects, Ashade said.
Nigeria is in its second year of a recession brought on by lower oil prices, which have slashed government revenues, weakened the currency and caused dollar shortages, frustrating business and households.
Finance Minister, Kemi Adeosun, has said that the government needs to invest in infrastructure as a way to spur economic growth, adding that the state government redeemed N167.5 billion in bonds last year.Â
However, the naira was quoted 18.3 per cent weaker for portfolio investors on Tuesday, compared with the interbank rate, a day after the central bank said it would allow investors to trade the currency at market determined rates.
The naira was quoted at 374.25 to the dollar on the central bank’s new currency window, data on market regulator FMDQ OTC Securities Exchange showed. The naira was quoted at 305.95 on the interbank market and 385 on the black market.
The bank on Monday said it would allow investors to trade the naira at rates determined by the market; a move the regulator hopes will increase the amount of dollars available.
The stock market, which has languished as foreign investors fled, welcomed the new central bank window, gaining 0.2 per cent in early trade on Tuesday after rising more than 2 per cent at its previous session.
With the move, Nigeria now has at least six exchange rates: the new rate, the official rate, the black market, a rate for Muslim pilgrims going to Saudi Arabia, a retail rate set by licensed exchange bureaus and a rate for foreign travel and school fees.
