Published On: Thu, Jan 12th, 2017

Skepticism over bonds ability to curb forex shortfalls

forex shortfallsLAGOS, (CAJ News) – AN international markets watcher is unsure Nigeria will be able to address foreign currency challenges through bonds.
The cynicism by the Rand Merchant Bank follows the announcement by Minister of Finance, Kemi Adeosun, the federal government (FG) planned to issue a US$300 million diaspora bond shortly after the Eurobond sale.
RMB said the planned Eurobond issuance in combination with the diaspora bond would go some way in alleviating the pent up foreign currency demand, which is estimated to be in the region of US$5 billion.
“Our main concern is their ability to attract constant sources of hard currency as these one-off measures may not be enough to satisfy the FX (foreign currency) demand in the long term,” the South African-headquartered RMB stated on Thursday.
Nigeria, Africa’s biggest economy and the continent’s leading producer of crude oil, has seen its oil receipts dip on account of soft oil prices and reduced production due to attacks on its oil infrastructure.
Militants have been destroying infrastructure alleging marginalisation of communities that boast the most significant amounts of oil.
The militancy is rampant in the Niger Delta where oil thieves have over the years have wreaked havoc.
“As a result, they (Nigeria) have experienced significant hard currency shortfalls necessitating the need to explore every avenue of accessing dollars,” RMB concluded. – CAJ News

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