Despite the CBN’s new policy said to have seen naira on a steady rise in value in the past one week, experts say the gain may not be sustained, unless a more radical policy thrust is put in place instead.
Most financial analysts said Nigeria should thread with caution on the early sign of success being reported.
The Central Bank of Nigeria (CBN) last Monday directed commercial banks to open kiosks at airports and followed this up by pumping in about $421.4 million through its interventions at the inter-bank market in two tranches.
On Monday, this move made the naira rise about 35 per cent, exchanging at N420 per dollar from N520 before the intervention, and at 300 at the interbank market.
Though the CBN has not said so, the improvement on crude oil sale in the January and February 2017 is believed to be the source of the dollar-funding of the exchange market.
But experts are of the opinion that if no concerted step is geared towards attracting foreign direct investments (FDI) from other sources of the economy, the relief from direct intervention may not last long.
Mr Christopher Acholonu, investment manager with Crystal Company Plc, a member of the Nigerian Stock Exchange viewed the situation thus: “This approach by CBN is not different from the policy, which the various international financial institutions have been frowning at. Remember that IMF, which leads as advisory body to all countries with weak economic challenges had earlier asked Nigeria to allow its local currency find its exchange rate through the market forces.
“To me, there is no difference between what CBN is doing now and what IMF and the World Bank warned the government not to go into, and that is: trying to dictate the value of he naira.”
In his comment, Henry Moyo, another economist, maintained that the solution to the scarcity of the dollar, can only be addressed with a non palliative economic policy.
“Diversify the economy, such that oil and gas sector will have competitors, which is only possible with a conducive investment environment for FDI,” he stated.
But the CBN spokesman, Isaac Okoroafor, has not seen any thing wrong with the government bank giving policing direction, as statutorily required of it.
He said the cheering news is that following the new measures by the central bank, the naira has been rising in value, leading to the possible conclusion that it might come to exchange at less than N400 per dollar soon, at the parallel market and less than N300 per dollar, at interbank by March 2017.
He said government is already looking towards closing the wide gap between official and unofficial market rates, through improved forex liquidity.
“The CBN’s intervention in the market had helped in reducing the pressure on Nigerians and foreign investors, who need to meet obligations that fall under visible and invisible transactions.” Okorafor said.
He reiterated that the bank was more than ready to support the interbank market by ensuring constant liquidity and transparency to guarantee efficiency in the market.
Yet other commentators said until Nigeria’s foreign reserves regained its loss of about 35 per cent in 2016, nothing would serve as the surest means of having a steady rate at the forex markets.
The country’s foreign reserves was estimated at $35.4 billion in 2015, but came down to $24.6 billion in 2016.
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