Analysts: CBN Determine to Attract Foreign Investors With FX Reform, Policies

Nume Ekeghe

 Experts in the financial service sector have stressed that reforms being undertaken by the Central Bank of Nigeria (CBN), utterances by the CBN governor, and the array of monetary policies recently rolled out are slated to lure foreign investor back into Nigeria.

The analysts noted that stakeholders in the foreign exchange market eagerly anticipate insights into foreign exchange market policies whenever the CBN governor addresses the economy at various forums or platforms.

They stated that the CBN’s drive to achieve stability has inundated its activities in recent times.

“Foreign exchange market stakeholders are always looking forward to policy direction on the FX market whenever the CBN governor discusses the economy at different fora or platforms.

“For example, we subjected his presentation at the Senate to text analysis, and it confirmed our assertion that the conversation is typically about the FX market.  The top 10 words with the highest frequencies were “Exchange, Billion, Rates, Demand, Dollar, Economy, Growth, Supply, Foreign, and Pressures”. These words account for 22 per cent of the total 635 words used in the presentation,” one of the stakeholders observed, “said experts at Afrinvest

“We also consider some specific insights shared by the governor at a media engagement this month, where he addressed critical issues about the backlog of FX demand in the economy. He revealed that of the total $7 billion in unpaid obligations, a forensic audit initiated by the authority identified invalid import documents and discrepancies in allocations amounting to $2.4 billion. He promised that the lacuna would be adequately addressed.  Among other strategies, he stressed that the Monetary Policy Committee (MPC) is working tirelessly to align its strategy with the CBN’s core mandate of price stability.” 
“We believe that with the recent liberalisation of the FX market, sustained improvement in Nigeria’s oil production, successful Eurobond issuance this year, and prolonged stability at the exchange rate, yields on Nigeria’s local fixed-income instruments would be very attractive to foreign investors. This is particularly realistic given the expected decline in the interest rate environment in advanced economies, ”the analysts said.

The experts also observed the recent Standard & Poors affirmation of Nigeria’s credit ratings at “B-/B” for both foreign and local currencies, with a stable outlook.

“The agency also kept Nigeria’s national scale ratings at “ngBBB+/ngA-2. The decision was hinged on a plethora of reforms undertaken by the new administration to address the nation’s fiscal sustainability condition through fuel subsidy removal, stoppage of ways and means advanced to the government, and unification of the multiple exchange rate window, among other measures taken on the fiscal side.

“The agency expressed optimism that if the policies are cautiously, courageously, and sustainably implemented, the nation’s credit rating would be positively impacted, but also acknowledged the current challenge in handling their impact on inflation and the exchange rate,” they stated.