Foreign investors are still staying on the sidelines , waiting for the naira to float freely , as the latest foreign exchange policy of the Central Bank of Nigeria has failed to restore confidence , ‘FEMI ASU writes

While the nation ’ s forex market has seen increased liquidity in recent days on the back of the Central Bank of Nigeria ’ s new policy action, foreign investors are not keen on bringing back capital into the country.

Industry experts, including the Chief Executive Officer , Financial Derivatives Company Limited , Bismarck Rewane , say the issue of investor confidence remains unaddressed

The CBN had on February 20 said it would provide direct funding to banks to meet the needs of Nigerians for personal and business travels , medical needs and school fees, effective immediately.

Although the weekly sale of forex to banks has helped to narrow the spread between the official and parallel exchange rates, pressure remains on the naira.

The naira, which posted some gains days after the CBN action , plunged to 475 per dollar at the parallel market on Friday from 450 on Thursday. It hit an all -time low of 520 to the dollar on February 20.

The Global Chief Economist , Renaissance Capital , Charles Robertson, described the increase in liquidity in the forex market as helpful, saying , “ Foreign investors want to know they can take profits on their investments when they bring money in.

“ But investors are deterred by multiple currency rates; so , the interbank rate too needs to align with the parallel rate , and this has not happened yet, ” he said in an emailed response to questions from our correspondent.

The interbank rate stood at N 305. 25 per dollar as of Friday, according to the CBN.

Robertson said investors might be slow to return , noting that in mid - 2016, some foreign investors put money into Nigeria when the currency was floated, but then found out that they were stuck again .

“ They will be more wary this time. This new policy has been a positive move , but does not yet compare to the greater reforms in Egypt that have reportedly attracted $13bn back into the Egyptian banking system , ” he said .

According to Rewane , the policy framework , the implementation and the process have to be consistent.

“ Until you actually free up the market and do all the things that are required , you will have exchange rate movement that is not predictable, ” he said.

He also described the CBN action as a move in the right direction “ but there is a lot of more work to be done . ”

“ The parallel market has actually started depreciating again . The more forward transactions they do , the less spot transactions they do , the weaker the naira is going to become . And that is what is happening already, ” he explained.

According to Rewane , there is a question of liquidity and a question of confidence , and liquidity does not address the question of confidence .

He said , “ You have to win the confidence of investors . Investors’ confidence is not won because you put some liquidity into the market for one week.

“ We have more work to do. We need to make the market transparent , allow the oil companies to sell into the market, allow the market move and don’ t control the price . ”

The President , Association of Bureau De Change of Nigeria , Mr . Aminu Gwadabe , said the fall of the naira to 475 per dollar was largely due to the increasing pressure on the transfer segment of the market.

“ Also , the slow take off of banks is an impediment to the exercise. Some banks give a 30-day waiting period to consummate school fees transfer. The market is also witnessing a stronger demand from our neighbouring countries, ” he added.

According to Gwadabe , the different applicable exchange rates and volumes by operators for the same product is also enhancing restriction to a single rate in the market.

“ If the CBN reviews the distribution channel and ensure that the BDCs serve the critical retail segment of the market and maintain intervention , the strength of the naira will continue in the days ahead , ” he said .

The Chief Executive Officer /Partner, National Finance, a US-based firm , Tor Langoy , stressed the need for proactive measures to entice capital into Nigeria.

“ There is serious lack of liquidity across sectors . Everybody requires capital . But we can only help a few . Capital is only going to start flowing again when you let go of the interference with the currency, ” he explained.

Citing the United Arab Emirates as one the countries that have successfully attracted capital , Langoy said , “ By introducing business- friendly policies, the entire world is now aware of the benefits of doing business in Dubai. There is no problem of repatriating your capital , and you don’ t have any forex issue; no capital controls.

“ These are major things for foreign investors. If a country is not able to fix those basic things, the capital goes somewhere else . The capital moves around the world , and Nigeria is just one out of 193 nations or investment destinations that are competing for the capital. ”

He said , why should anyone invest a dollar in Nigeria when they could happily invest in Dubai or in any other nations in Africa without currency issues and fiscal and monetary policies unconducive for investments?
“ The global capital markets are just waiting for a free float of the naira. The naira may depreciate .

But take the pain and get over it. If it’ s 1, 000/dollar; it doesn ’ t matter . Look at what happened to the Egyptian pound. It dropped 50 per cent but now money is coming back into the country . It is just like a few months of pain with decades of happiness, ” Langoy stated .

According to JPMorgan Chase & Co, until Nigeria devalues or makes a clear switch to a free -floating currency, the country will struggle to lure back foreign investors.

The Acting Head of Economic Research, Ecobank, Gaimin Nonyane, said the nation ’ s foreign reserves , which had been rising since November , remained inadequate to meet forex demand .

He said in a note, “ The CBN’ s ban on importers of 41 specified goods will prevent the naira from effectively clearing in the forex market.

“ We believe that the successful Eurobond issuance is a positive development for Nigeria , as the country seeks to source for forex to relieve pressure on the naira. ”

The Ecobank analyst said the forex injection should help to boost Nigeria ’ s forex reserves , and potentially allow the CBN to loosen its hold on the naira.

He added , “ However , the amount raised will not meet Nigeria ’ s estimated $5bn forex gap; this suggests that the operating environment will remain painful in the short term.

“As such, the naira will remain under pressure, exerting pressure on the CBN to devalue the currency further . We expect an official interbank market rate of close to N 360 - N 380 to a dollar in the coming months .”

http://punchng.com/cbn-new-forex-policy-fails-to-excite-foreign-investors/

www.nairaland.com/attachments/4899164_screenshot201702211249551_jpeg3ff411f2c867d87760f4bbb112b31504

If i hear Kpam! I will send tboss to ur house. U already know wot it means.

Ladiez and Gentz,
I dedicate this FTC award to all Ekiti civil servants whose 6months salary remains unseen.

To the non-Ekiti indigenes shouting and hailing their 'Mentor' up and down, God will make u go tru what d Ekiti civil servants are going tru in d hands of their governor. Amen?

Olalekanbanky1 well done oo ...

We will get there

of coz investors want to invest wisely


in other news who has listened to Nicki funeral song by remy?


come n cry with me

I hear

OK

The policy no excite me sef, how much more foreign investors




#BringBackTheOldNigeria

As at today, naira to dollar, how much?

How will it excite them when they heard Buhari may come back today or soon

An announcement denouncing Buharri's return today should be made ... and watch how investors reacts. USELESS VEGETABLE.

UP OSINBAJO ..... DOWN WITH THE MEAN VEGETABLE and his useless BMC OPERATORS!

Na wa o. Just few weeks of implementations. Many Nigerians are really sick.you expect foreigners to rush down immediately..

OK na






Today is my birthday

I said this in one of my threads Seun refused to push to the front page: https://www.nairaland.com/3659780/forex-narration-nigeria-why-it

But if it is Tonto Dikeh now, they will fast track it like lightning. I've said it, and I will say this again...the forex intervention by CBN cannot be sustained, and it will only have a minute short term effect..now..it is N460 to a dollar, and it will still crash...I only laughed at those who called EgunMogaji unpatriotic in one of the threads I read this morning. Nigerians are easily fooled or should I say throw caution to the wind when our politicians and those in the corridors of power entices them with one small candy like little children. Now, they are shouting Osinbanjo is working or so. What CBN is doing does not impress foreign investors one bit because those people are not just intelligent to see through the deception but want a long-term solution from the economic team of the Nigerian government.

No sane investor will put his money in "wuruwuru" kind of forex naira appreciation that is artificial....but if you talk, they will say you be one of the speculators...I think a lot of Nigerians do not know the trouble we are in..CBN is just trying to do a cover-up...Plantain dey rot, you talk say no e dey ripe (Ogede n baje, e lo n pon)...I know for sure that they cannot continue to intervene, if not..the Venezuela situation is loading....

Even if people resort to panic selling, and sell all their dollars...yeah, naira will appreciate a little, for a while, and then gradually go up again and crash like auto crash for Lagos-Ibadan expressway until we begin to address the main issues which are industrialization, electricity generation and massive assistance of SMES...then export increase.

*Don't laugh yet at those who predicted N600+ to a dollar*

The only closure for this many dollar injection the CBN is into should be to lower the dollar price and use that window to boost local production.... Apart from that this is just short term and then back to square 1

Still where we are.

Besides the already known sweet potential benefits of floating the Naira (i.e. stimulating FDI and cancelling the feast of forex rogues), what exactly are the potential demerits of floating the Naira which has made the govt/CBN vehemently resist this move for ages?

I understand floating would certainly push the Naira into the N600+ realm to a dollar with injurious effecta on inflation and on poor masses. But a good number of economists believe that would be beneficial to Nigerians. Explanations really needed from experts here...

This is still a process...

Singapore1:
Olalekanbanky1 well done oo ...

Lol... no vex bro. 2mao is ur turn

it is well.
Check my signature, you would be glad you did.

Nothing good can come out of the muntura dullard..

Who still remember Chinese_Nigeria currency deal
Bubu will be used to correct children who don't want to go to school..

Somebody summed it up: Introduce business friendly policies. Free up the Naira & let the market decide its true value. And be consistent. Yes we will suffer for a while. But we cannot continue to pretend we are what we are not.

Also provide electricity and basic infrastructure. We must produce more and import less. That will reduce pressure on our currency.
Look at America even accusing China of undervaluing the Yuan. The Chinese deliberately use a weaker Renmibi to promote export.

We should not fool ourselves believing that foreign investors who are largely speculators owe us anything. They can take their money out and dump us at anytime.

In our case, we are lamenting a weak currency because we barely export anything aside oil.

But borrowing from the loan sharks like IMF & World Bank is no way forward.

Selling long term Euro or Dollar Bonds that will pile up debt for the next generation to pay off is silly too.

So restructure Nigeria. We do not need two national parliaments. No need for 36 states/governors/deputy governors/State Assemblies who go to Abuja with a begging bowl every month.

Recurrent expenditure must reduce to around 30 to 35%.

Nigeria is indeed a broken country. Who tells these so-called experts that it is only foreign investors that can save Nigeria. While good investors could assist the economy of a country but I am afraid that the type of foreign investors looking to come into Nigeria will be very unhelpful to Nigeria in the long run. These portfolio investors who masquerade as foreign investors can never help Nigeria. Their only interest is to come and take positions in the fixed income and equity markets at the time the Nigerian naira is completely beating down. Their positions will create artificial bull markets that will attract some uninformed locals into the markets to further inflate the markets. At the time the uninformed are attracted to the market, they will pull their money from the market and Nigeria will go back to square one. They are just creating a fertile ground for this scam by insisting on foreign currency liquidity. They have done this in many markets and economies of the world but have so far failed to replicate that in China. Nigeria being a country of foolish people who are only interested in tribal identity, it will be easy for these assets strippers and economic pirates to have their way.

- Culled from lost@love comment (punch news) on CBN policies failed to attract investors.

Useless investors

Olalekanbanky1:
If i hear Kpam! I will send tboss to ur house. U already know wot it means.

Ladiez and Gentz,
I dedicate this FTC award to all Ekiti civil servants whose 6months salary remains unseen.

To the non-Ekiti indigenes shouting and hailing their 'Mentor' up and down, God will make u go tru what d Ekiti civil servants are going tru in d hands of their governor. Amen?

Rochas me, I Fayose you, God no go vex

Opinedecandid:
As at today, naira to dollar, how much?

465..parallel market

everyone knows

Even Nigerians are watching...if its sustained over a certain period, confidence will return.

I like the new directive of settling claims withing 24hrs..that will go a long way to reduce black market patronage and hence force them to bring down their price to remain competitive or eat their dollars. there was a 20 naira difference between buy and sell during the recent gain. They just pegged their sell rate.

Imagine having to wait three weeks for pta with no guaranty you will ne given as in time past.

wristbangle:
Nigeria is indeed a broken country. Who tells these so-called experts that it is only foreign investors that can save Nigeria. While good investors could assist the economy of a country but I am afraid that the type of foreign investors looking to come into Nigeria will be very unhelpful to Nigeria in the long run. These portfolio investors who masquerade as foreign investors can never help Nigeria. Their only interest is to come and take positions in the fixed income and equity markets at the time the Nigerian naira is completely beating down. Their positions will create artificial bull markets that will attract some uninformed locals into the markets to further inflate the markets. At the time the uninformed are attracted to the market, they will pull their money from the market and Nigeria will go back to square one. They are just creating a fertile ground for this scam by insisting on foreign currency liquidity. They have done this in many markets and economies of the world but have so far failed to replicate that in China. Nigeria being a country of foolish people who are only interested in tribal identity, it will be easy for these assets strippers and economic pirates to have their way.

- Culled from lost@love comment (punch news) on CBN policies failed to attract investors.

You've just said it all. The Nigeria capital market environment now doesnt even need foreign investors for now because the focus is to grow the economy and stabilize naira. So rewane bushman was saying just crap and jp morgan is just saying what will benefit the dollar. Greedy set of investors.

JustinSlayer69:
When Buhari was insistent on pegging the 200 Naira to a Dollar, all we heard was "FLOAT THE NAIRA"

It was repeated so much that, even i, as skeptical as i was, wondered if it was the solution.

What happened when PMB answered the West's advice? Things got worse.

We don't have the infrastructure on ground to "float". What Electricity do we have for industrialization?

Whether we like it or not, NAIRA has to be defended short-term and then long-term measures that are non-oil dependent would then be explored.

The Naira is not floating. In a floating exchange rate system you won't have multiple exchange rates. So to say that Buhari "answered the West's advice" is preposterous. Na wa for una, such a gullible citizenry.