Capital market operators commend FG stance on naira devaluation

Some capital market operators on Thursday
commended the Federal Government for resisting the
pressure to devalue the naira.
They told the News Agency of Nigeria (NAN) in
Lagos that rather than devalue the naira,
government should address the wide margin of the
exchange rate in the official and black market.
NAN reports that the market operators made the
suggestion against the backdrop of recent calls for
devaluation of the naira.
While the official naira exchange rate has remained
stable at N197 to the dollar at the CBN, it once
depreciated to as low as N390 to the dollar at the
black market.
It is currently within the band of N320 and N330 to
the dollar at the black market.
Capital market operators said that the
government’s stance against devaluation of the
naira had reduced activities of speculators at the
market, especially the portfolio investors.
The operators said that whatever negative effects of
the government’s position in the market would
only be in the short-term, while the market would
stabilise in the long-run.
Alhaji Rasheed Yusuuf, the Managing Director,
Trust Yield Securities Ltd., Lagos said that
government’s decision had reduced foreign
investors’ participation in the market and curtailed
speculative buying.
Yusuuf said the capital market lost huge amounts of
money in 2015 due to massive sell off by foreign
investors and some rich individuals leading to
drastic drop in the price of equities.
The market is gradually stabilising because
portfolio investors are not investing the way they
used to do in the past.
“The kind of foreign investors we need now are the
ones that can help us to develop our infrastructure,
not speculators that will offload at anytime”.
Yusuuf said the government and regulators needed to
reorganise the capital market to have more local
investors that would support local industries to
achieve economic growth.
He attributed the nation’s economic challenges to
wrong policies in the past, stressing that Nigerians
should embrace locally made goods to create
employment.
Mr Okechukwu Unegbu, a former President of
Chartered Institute of Bankers of Nigeria (CIBN),
said that government’s stance not to devalue the
naira had affected the amount of foreign funds in
the market.
Unegbu said that foreign investors had developed
‘wait and see’ attitude due to currency risks and
external pressure to devalue the naira.
He said that the market fundamentals were still very
strong, adding that investment in the capital market
should be for long-term and not for speculative
activities.
Unegbu urged the Central Bank of Nigeria (CBN) to
pursue the right policies and desist from any policy
somersault.
He also advised the apex bank to consult widely
before pronouncement on any policy.
Mallam Garba Kurfi, the Managing Director, APT
Securities and Funds Ltd., Lagos, observed that
daily transactions in the market had dropped due to
government’s stance on devaluation.
Kurfi, however, advised that government should
address the wide gap between naira exchange rates
at the black and official markets to encourage
foreign participation.
He said that foreign investors would continue to
shun our market if government failed to devalue or
create an alternate foreign exchange window for
them to play in the market.
Kurfi also suggested to government to compel the
Pension Fund Administrators (PFAs) to invest more
in the capital market to bridge the gap created by
the exit of foreign investors.
Mr Sunny Nwosu, the National Coordinator,
Independent Shareholders of Nigeria (ISAN),
described devaluation cal as “Western conspiracy”.
“We run a mono-product economy because we
don’t have anything to export to enjoy foreign
exchange gain; devaluation of naira will not favour
us,” Nwosu said.
Nwosu urged the government not to succumb to
devaluation pressure, rather government should look
at ways to encourage local participation.
He said that government should be more serious on
the issue of diversification of the economy and that
the nation’s agriculture potential should be
harnessed to boost revenue generation.
According to him, the government should come up
with good policies on agriculture to support farmers
with loans at low interest rates to develop the
sector.