From CNBC Africa
Despite the excess liquidity in the system, Nigerian bond yields have picked up marginally over the last few days.
“The irony in the sense is that, even though the central bank left the policy rate unchanged on 12 per cent at this week’s MPC, they’ve actually allowed an accumulation of excess liquidity in the system,” Samir Gadio, Emerging Market Strategist at Standard Bank told CNBC Africa.
However, a flaw has been found at the end of the curve as investors are increasingly becoming cautious about the medium term outlook domestically.
“I don’t think there’s any significant appetite for that duration and I’m also worried that if yields go down aggressively, at some point there’s going to be a sudden reversal and they’ll be caught off guard,” he added.
While the market is currently at a stabilized level, Gadio believes that it will continue for some time around the 12.5, 12.6, 1.7 mark and that we are not going to go further down regardless of the fact that there’s a lot of liquidity in the system.
Written by Dara Rhodes/Read more at CNBC Africa.