October 21, 2019/Coronation Report

In this week’s Nigeria Weekly Update we make the careful distinction – which we first observed last week – between risk-free one-year Naira rates in primary market auctions and those realised in the secondary markets. Usually these are almost exactly the same but recently they have diverged.

This is a new phenomenon and raises a number of questions about market liquidity and how best it can be controlled. The monetary authorities have spent over two years successfully managing the closely-related foreign exchange and Naira interest rate markets and we imagine that divergence in risk-free rates is unwelcome.

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