Lagos - The recent devaluation of the local currency to retain its competitiveness seem not to be bearing fruit, analysts argued.
"Measures enacted by the central bank at its November MPC sitting have seemingly fallen on deaf ears as the naira peaked at 187,88 yesterday, 11,8 percent higher than the Central Bank of Nigeria's revised mid-rate," Rand Merchant Bank (RMB) said its latest global markets report on Wednesday.
"We cautioned post-MPC that an upward adjustment of the mid-rate would not necessarily lead to a convergence of the official, interbank and the BDC rates as investors remain skeptical of naira-denominated assets."
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An analysts said the diminishing oil price had weighed heavily on monetary authorities, demanding daily intervention to quiet the incessant demand for US dollars.
"Seasonal month-end inflows from multinational oil companies have rendered little support to the ailing currency, which is likely to come under renewed pressure today, oscillating between 178 and 188," he said.
At the devaluation recently, CBN Governor, Godwin Emefiele, stated emphatically that the bank had the means with which to protect the value of the currency.
"However, the central bank’s reserve holdings are dwindling, resulting in an expansion of its forward book to generate US dollar liquidity. This exercise is likely to prove costly if sustained over a prolonged period of time," RMB argued.
- CAJ News