Published On: Tue, Sep 22nd, 2015

Pessimism at CBN measures to stabilise Naira

RMBFrom OKORO CHINEDU in Lagos, Nigeria

LAGOS, (CAJ News) – ANALYSTS argue the Central Bank of Nigeria’s injection of the United States currency into the interbank market is not the panacea to halt the local Naira’s slide.

The apex bank’s US dollar injection into the interbank market last Friday was seen as reflecting the immensity of the liquidity squeeze plaguing the local market.

According to Rand Merchant Bank (RMB), the economic think-tank, market sentiment, which is largely expressed through movements in dollar-denominated non-deliverable forwards, slightly improved after
President Buhari endorsed the CBN’s policy of restricting foreign-exchange trading to stabilise the naira.

“However, Nigeria’s fundamentals remain unchanged,” RMB argued.

The financial house said the country faced structural challenges that demand a weaker currency to adjust for fiscal and external imbalances.

“We have long held that the naira is overvalued at the prevailing spot rate and an orderly devaluation is in order. Yet, many would agree that the timing is not easily discernible.”

RMB expected the CBN to hold the line for the remainder of the year.

The Naira has suffered immensely from the falling the plummeting oil prices.

While the oil industry is the mainstay of the country’s economy, the industry is on a wane globally.

– CAJ News









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