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.
SOURCE: GURDIAN NEWSPAPER, NIGERIA