Abuja - Rand Merchant Bank (RMB), the international markets
watcher, believes politics is prevailing over economic realities on the
deadlock around the valuation of the Naira against the Dollar.
There has been conflicting positions from government in the public domain regarding the emotive issue.
“In the last few weeks, we have heard various authorities give the market mixed signals on the issue,” RMB stated.
RMB’s Celeste Fauconnier noted the divergent positions by government around devaluation.
The analyst pointed out recently, Central Bank of Nigeria Governor, Godknows Emefiele, reiterated that the weakening currency would not be devalued anytime soon, while on Tuesday, Vice President, Yemi Osinbajo, said the foreign exchange market will be “unified” soon.
The sentiment was taken as a hint towards devaluation in the face of the Nair's struggles against the United States currency.
Meanwhile, members of Nigeria’s upper house of parliament have agreed to adopt an official exchange rate of $S/NGN 305 for the 2017 budget but were adamant that the central bank initiate measures to do away with the parallel market.
RMB said judging by where the unofficial rate was trading and the organisation’s measures of fair value, the adopted rate fell short of where the Naira is fairly valued.
“While the call to close the parallel market is welcome, it is not new to the authorities as various local and international institutions have been prompting the authorities to do this,” said Fauconnier.
- CAJ News