IN BRIEF

• GHANA
  Fixed Income: Demand conditions softened markedly in March 2025 as investors reviewed their fund allocations amidst the drastic decline in nominal yields on T-bills. Specifically, we note that commercial banks have pivoted into OMO Bills with our estimate of outstanding holdings in the OMO Bills at GHS 37.0bn (+49.2% m/m | +GHS 12.2bn m/m). We interpret this tilt as a strategic play to maximize return on investments as the sharp decline in nominal yields softened the ex-ante real return on T-bills whereas the OMO bills continue to earn the higher policy rate. We expect the Treasury’s ongoing squeeze on spending to restrain the borrowing requirement and stabilize yields around current level, pending sufficient decline in inflation in 2H2025, which could revive yield decline to the low-to-mid teens. The BOG’s decision to hike the policy rate by 100bps to 28.0% and introduce a 273-day OMO bill for longer duration mop-up of GHS liquidity will mute demand for T-bills. However, we do not expect an upward reversal in yields as ongoing fiscal tightening will cap the borrowing pressure.
  

  Currency:
  The Ghanaian Cedi enjoyed calm market sessions in March 2025 with the local currency being virtually static at 15.5/USD as ample FX liquidity persisted on the local market. The Bank of Ghana continued its ad hoc FX supply with a total sale of USD 264.4mn and assurances of continued FX support by the Central Bank. We expect the Cedi to sustain its stability in the month ahead as the BOG’s rate hike and liquidity curbing measures will tighten grip on FX demand while the ongoing domestic gold buying programme remains a source of FX supply.

 

• KENYA
  Fixed Income: Investor appetite strengthened for the 91-day but muted for the other tenors, fuelling a month-on-month upsurge in total bids for Kenya Treasury bills and sustaining the downward pressure on yields across the curve in March 2025. The Central Bank’s next MPC meeting is slated for 8 April 2025 with our expectation for a hold as Kenya’s annual inflation inched up for the 5th straight month in March after the CBK’s 50bps rate cut. As investor demand remains robust, we expect further moderation in yields in the immediate term. However, a rate hold from the Central Bank could slow the downward pressure on yields amidst the inflation uptick.

  Currency

  :The narrative of a stable Kenyan Shilling remained intact in March 2025 as the strong forex reserve was further boosted by the partial inflow from the USD 1.5bn Eurobond issue which settled in March. Gross reserves increased by 9.9% m/m to USD 9.95bn as of 27 Mar-2025, with the authorities yet to drawdown the USD 1.5bn UAE privately placed bond. We expect the Kenya shilling to remain stable in the immediate term amidst impressive FX reserves and relatively high real interest rates.

 

 

• NIGERIA
  Fixed Income:The Treasury surprisingly executed four separate auctions across the 91-day to 364-day maturities in Mach 2025 compared to the two auctions in February. Investor demand softened slightly amidst liquidity constraints but remained strongly above target. Treasury yields ticked up across the curve due to reduced investor demand, particularly in the second and third auctions. We think the rise in Treasury yields reflect the authorities’ decision to boost the appeal of NGN securities, to curb the recent market selloff and ease the depreciation pressure on the Naira. The 130bps decline in inflation for February 2025 is positive for real interest rates as the policy stance gets tighter while risk-adjusted returns rise to positive.

  Currency

  :

  The Nigerian Naira weakened against the US Dollar in March 2025 (-2.3% m/m), reversing the strong gains recorded in the first two months of the year. The decline was driven by increased FX demand from repatriating foreign portfolio Investments (FPIs) and lower FX inflows due to a drop in global oil prices and a decline in domestic oil production. We view the expiration of the Naira-for-Crude deal and Dangote Refinery’s suspension of petroleum sale in Naira as immediate risks to Naira stability as the resultant rise in FX demand will exert additional pressure on the currency.