Nigeria’s decision to reduce its capital inflows to the U.S. by $4 billion a week earlier, and the decision to cut off direct foreign aid to the country, could spell the end of NDI in the Europes market.
Nigerian bond yields are up over 1.5% in the past week, and NDI has already begun to take a significant bite out of the markets.
On Tuesday, the government’s central bank raised its foreign exchange reserves by $5.5 billion to $5 billion, a decision that is likely to help it in reaching a deal with the U of A, which is trying to end a four-year period of drought and floods in the country.
The decision to suspend NDI inflows was welcomed by the markets, but the markets were also disappointed that the decision did not come in the form of a loan guarantee, something that would have helped with the crisis.
Analysts say that the suspension of NDA inflows would have led to an increase in the value of the UB’s bond, which could have pushed the value higher, but would also have had an adverse effect on the NDI.
The market has been trying to predict the impact of the NDA cut in the short term, but its analysts have been surprised at the recent move by the central bank, which also said that it would consider a loan agreement with the university in the event of an economic crisis.
Najib was a guest on CNBC’s “The Profit” this morning, and he said that he hopes that the market will “be on the right track” for the long term, and that there is a good chance that the NDi cut will be reversed.
The NDI cut has been in place since June, but it has come as a surprise to many analysts.
The central bank has repeatedly stressed that it is not targeting NDI for the duration of the drought and the flooding.NDP leader Muhammadu Buhari is expected to take over as Nigeria’s president next month, and his party is hoping that he can put the drought behind and revive growth.