– Experts say naira devaluation in the last two months is a good thing– Country stands to gain from government’s policy
– Naira has depreciated several times
At least two months after Nigeria went for naira devaluation; the nation is starting to gain from the decision
Exotix Partners LLP and Standard Bank Group Ltd in the last two week have told its customers that a good number of them should return to the country.
It stated that it started enforcing capital controls from late 2014, that its clients should begin to purchase naira assets again.
The naira is said to be worst-performing currency in 2016 among more than 150 globally has depreciated 37% against the dollar since the Central Bank of Nigeria (CBN) fixed its exchange rate since June 20, while bond yields have increase to more than 20 percent.
The naira appreciated 4.6% to 315 per dollar on Tuesday, August 23 after falling to a record 350.25 on Friday, August 19
Someone counting Nigerian naira
The naira is said to be the worst currency in the world as of present. One of the reasons for the depreciation of the Nigerian currency is said to be based on the lump in global crude oil prices.
However, there are indications that naira has begun to gain some dividends after two months of naira devaluation
“The cheap naira is attracting foreign investors,” said Lutz Roehmeyer, a money manager at Landesbank Berlin Investment, which is in charge of about $12 billion of assets.
“At 325 per dollar, the naira is too weak” Landesbanks stated saying it foresaw a bounce back for the Nigeria means of exchange.
Roehmeyer’s funds have doubled their availability of naira debt, having it in the form of bonds issued by the World Bank’s International Finance Corp. Moreso, instead of what the current administration has to the almost the same value of almost $9.2 million in August.
Godwin Emefiele, CBN’s governor fixed the naira for a dollar in February 2015 at 197-199, in order to prevent it from depreciating inspite of the fall in crude oil prices, on which Nigeria gets 90% of exports and a large chunk of government revenue.
Bar graph showing currency of different countries
According to Craig Thompson of Continental Capital Markets SA, based in Nyon, Switzerland. He said the Nigerian currency exchanges at N395 per dollar in the parallel market, which was 20% weaker than the CBN rate.
On Tuesday, August 23, the nation’s currency again showed its inconsistency as it now trades at N397/$1, dropping two points.
Thompson said: “The exchange rate is closer to fair value in the eyes of most investors,” said Andrew Howell, a New York-based frontier-markets analyst at Citigroup Inc., the world’s biggest foreign-exchange trader. “But there still aren’t many inflows. You can’t really call it a normally-functioning exchange rate yet.”