Traders’ Voice…Desperate Love

Naira Falls As Reserves Fall To $38.8 Billion
Naira Falls As Reserves Fall To $38.8 Billion

It’s the season of love again! The era of “My View,” “His/Her View,” “Our View” and “God When.” Whatever situation you find yourself in on Valentine’s day, remember that we at Comercio Partners Limited Love you unconditionally.

At the first edition of our Valentine’s series, we talked about my desperate move to keep a dying relationship and how it ended in premium tears, and how we felt the Apex Bank was doing the same thing at the time; trying to maintain a relationship with a lot of fundamental issues that can come at a huge cost.

It’s been a year and it seems we are back to the same position with the Covid-19 pandemic putting us in an even worse off situation. 

Before I go on, I would like to congratulate the Tampa Bay Buccaneers (The Bucs) on winning the Super Bowl 55 on Sunday. It was quite an impressive and convincing win over the defending champions, Kansas City Chiefs.

It is important to note that the last time the Bucs won a Super Bowl was in 2002 and they had not made the playoffs since 2007. However, the addition of a six-time Champion in Tom Brady saw the team win its second championship since 200in his first year with the team.

I say this to emphasize the importance of leadership in any organization, and as always, we at Comercio Partners Limited are ready to “lead you into the future” so please come journey with us.

Traders' Voice…Desperate Love Brandspurng
Comercio Research, NBS

I am no relationship expert, but one thing I know for sure is when a relationship is built on a shaky foundation, it is bound to fall apart when faced with challenges. This was the case last year, as we witnessed a significant drop in capital importation on the back of the covid-19 global disruption coupled with FX illiquidity concerns.

Total Capital importation declined by 71% from $5.85 billion in Q4 2019 to $1.07 billion in Q4 2020. The Major drag was FPIs, which declined by 98% from $4.3 billion in Q4 2019 to $35.15 million.

With foreign flows expected to rise in Emerging and Frontier markets due to the relatively less attractive yields in the developed nations on the back of the unprecedented amount of stimulus, I think it is safe to say that the Apex Bank is ready to give the relationship another go. You cannot blame them, especially when a country like Ghana is getting significant FPI interests.  

Valentine is coming, where is your other half?

You are sitting at home.

Your peers are getting inflows.

You are so lonely... Valentine is coming. 

Speaking of Ghana, despite the growing concern of a widening gap in their fiscal deficit and increased borrowings, the local fixed income market has gained significant interest from FPIs this year.

This has helped to grow their external reserves. From the latest economic and financial data, gross FX reserve grew by $206 million y/y to $8.62 billion, therefore keeping the Ghana Cedis relatively stable. In the case of Nigeria vs.

Ghana Jollof rice, I think we can all agree that ‘Naija Jollof’ beats Ghana Jollof, but clearly from the table below, it is obvious that Ghana remains more attractive to investors than Nigeria right now.  

Ghana vs Nigeria




External Reserves ($’Billion)



Exchange Rate ($/LC)



Interest Rate (%)



Tbill Rate (%)



5-year Bond (%)



Inflation (%)



Real Rate of Return (TB rate minus Inflation)



Real Rate of Return (MPR rate minus Inflation)



Comercio Research, Bloomberg

Ghana’s first cedi-denominated medium-term debt sale in 2021 was oversubscribed 2.5 times the offer as foreign investors’ participation grows stronger.

The nation received a demand for 2.87 billion cedis ($492 million) of its new six-year notes, compared with the 800 million cedis on offer. All bids were accepted at a coupon of 19.25%. This leaves us with the question, “can Nigeria level up?”

Read Also:  Traders' Voice…All Shades of Red

OMO AUCTION RESULT…. (massive shocker)

The OMO auction held last week closed relatively weak with a bid to cover ratio of 0.81x as the Apex Bank sold N71.66 billion as against N100 billion offered. We also witnessed a significant spike in stop rates, the highest levels since April 2020.

The 89-day, 180-day & 362-day notes were allotted at 7.00%, 8.50%, & 10.10% respectively. This is significantly higher when compared to the previous auction, were the 89-day, 180-day & 362-day notes were allotted at 1.51%, 4.34%, & 5.74% respectively. 

The Spike rate in rates at the OMO auction had a ripple effect on the financial market, with the bond market witnessing a kneejerk reaction across board and the equities market sustaining its sell interest. Nevertheless, we expect the Nigeria financial markets to trade cautiously this week as market direction remains unclear.

War against bitcoin… 

While market participants were still trying to get a full grasp of the impact of the OMO auction on market and a possible direction of the Apex bank in near term, the CBN released a circular on Friday last week, instructing financial institutions to immediately close the accounts of persons or entities transacting in or operating cryptocurrency exchanges noting that such activities were prohibited.

The circular got a lot of mixed reactions, with the younger population seeing the policy as a deliberate attempt by the government to impoverish young Nigerians who have been able to create wealth for themselves through crypto trading. Well, you can’t blame them, especially given the significant growth of bitcoin transactions in the past 5 years. 

In the past five years, Nigerians has traded 60,215 bitcoins, valued at more than $566 million which, apart from the US, is the largest volume worldwide on Paxful, a leading peer-to-peer bitcoin marketplace.

Bitcoin trades had its highest spike of 30% this year during the national lockdown in the country and the highest volume traded during the peak of the pandemic. Between January and September, Paxful reported a 137% increase in new registrations in Nigeria. 

The Apex Bank provided further clarity on a press released on Sunday stating that they did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies.

The increased number of fintech exchanges providing bitcoin transaction have been badly hit by the circular. While a lot of regulators in different countries have struggled to find a way to properly regulate cryptocurrency, we have seen significant increase and appetite in that space.

There is also a growing consensus that virtual money is the future and is here to stay, after all just as the human mind constantly evolves, what is known to us all as money and currency has also evolved over time.

It started from Commodity money, which is also known as trade by barter, then moved on to Metallic money (Gold), then to Paper money (Currency), then to Credit money and Plastic money (Cards). I guess the next phase will be virtual money (Cryptocurrency) and rather than restricting banks, it may be in the best interest of the regulators to start to draw a tight and favorable regulatory framework to support Cryptocurrency.

Shutting down the exchange will just fuel the crypto peer to peer anonymous market, which is the last thing Nigeria wants. However, we would like to hear your thoughts on this too, feel free to reach out to us with your response.