Lagos - The local financial markets are struggling to recover from the recent suspension of Central Bank of Nigeria (CBN) Governor, Lamido Sanusi, who is challenging his dismissal by President Goodluck Jonathan.
“It is difficult to call a direction on the naira at the moment as the market continues to digest the news of Governor Sanusi’s suspension. It is a bitter pill to swallow for the international investment community as it casts doubt on the independence of the central bank and the health of the local financial markets,” Rand Merchant Bank (RMB) said in its latest analysis of the local stock market.
Sanusi was controversially removed from his post following orders from Jonathan over alleged discrepancies in the local economy.
Critics however slammed the move, which they argued is illegal, saying Sanusi was paying the price of playing whistleblower amid incidents of corruption.
RMB painted a gloomy picture of the local currency and markets following the contentious suspension.
The think-tank noted that the swiftness of the CBN’s reserve depletion was evident in the 13 percent decline in its international position over a period of one year.
Reserves were recorded at US$40.7 billion at the start of the week following a series of interventions by the central bank to help stabilise the local currency.
“Its (CBN’s) efforts are proving ineffective as the local unit continues to flirt with USD/NGN166. Despite assurances by government authorities, the market is still shaken by last week’s events. There is also an element of opportunistic buying as importers take advantage of the divergence between the official and interbank rate. We anticipate heightened volatility in the short term and would not be surprised if the CBN further tightened monetary conditions to protect the value of the Naira,” noted RMB.
– CAJ News