Lagos - Analysts argue the Central Bank of
Nigeria's injection of the United States currency into the interbank market is
not the panacea to halt the local Naira's slide.
The apex bank’s US dollar injection into the interbank
market last Friday was seen as reflecting the immensity of the liquidity
squeeze plaguing the local market.
According to Rand Merchant Bank (RMB), the economic
think-tank, market sentiment, which is largely expressed through movements in
dollar-denominated non-deliverable forwards, slightly improved after President
Buhari endorsed the CBN’s policy of restricting foreign-exchange trading to
stabilise the naira.
"However, Nigeria’s fundamentals remain
unchanged," RMB argued.
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The financial house said the country faced structural
challenges that demand a weaker currency to adjust for fiscal and external
"We have long held that the naira is overvalued at
the prevailing spot rate and an orderly devaluation is in order. Yet, many
would agree that the timing is not easily discernible."
RMB expected the CBN to hold the line for the remainder
of the year.
The Naira has suffered immensely from the falling the
plummeting oil prices.
While the oil industry is the mainstay of the country's
economy, the industry is on a wane globally. - CAJ News
- CAJ News