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Nigeria targets raising foreign reserves, naira value with Eurobond

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Outrage as CBN reintroduces charges on cash deposits, withdrawals

One of the targets of the recently marketed Eurobond deal is to use the goodwill to shore up the Nigeria’s depleted foreign reserves and increase the naira value, according to the Central Bank of Nigeria (CBN).

The anticipation is that at the time all allotments from the bond are fully paid up, the proceeds would be held in a special account to be created by CBN, in conjunction with the consortium of managers appointed by government to manage the bond process.

The account will help boost the monetary policy of Nigeria.

Governor of the apex bank, Godwin Emefiele, told foreign journalists that given the anticipated success of the bond, there would be a number of economic growth that Nigeria would draw from the outing.

One of the gains is to sustain the CBN policies, directed at the country’s foreign reserve, which is planned to rise from its present $29.4 billion to about $40.56 billion, before the end of the first quarter of 2017.

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Another area of emphasis is to use the international acceptance of Nigerian economic policy, via the Eurobond to stabilise the falling rate of the naira, which exchanged at N506 per dollar on Monday, at the parallel market and N326 at the interbank market.

Emefiele also disclosed that the CBN had set a target to grow reserves by 5 per cent monthly, beginning from March, the naira should gain at least 20 per cent in value appreciation within the same period.

But analysts insist that until the CBN allows the naira to find it’s actual value through the market forces, not much can be achieved by projecting its value based on the outcome of the Eurobond.

Dr. Solomon Ezomon, a senior lecturer at the University of Lagos Business School, said the bond is not yet Nigerian money until its maturity date when the investors might have recouped their capital and the yields.

“It is like any other financial instrument that the government has been selling through the CBN or DMO for immediate cash with which to embark on known project, but which must be repaid to the subscribers at demand or before maturity deadline.

“There is no alternative to having a policy initative that can guarantee a long-term development plan,” he said.

The expectation in many quarters is that there should be more concerted efforts at having the various applications for loans from Nigeria sail through, such can only be seen as a mark of international acceptability of Nigeria.

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