Experts express doubts as Naira sustains rally after depreciation

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Financial experts have expressed their doubt over the ability of the Naira to sustain its weeks of rallies against the dollar at the forex market if certain things are not put in place by the government.

The naira, which nearly hit N900/$ early last week, made a major comeback after the Central Bank of Nigeria (CBN) also injected an unspecified volume of dollars into the market to boost liquidity.

At the Investors and Exporters Forex (I&E) Window- now the official market rate- the naira is quoted at N441.46/$, data on the CBN website showed. The local currency has been stable at this window used for official transactions, buy bulk of retail transactions happen at the parallel market.

The Naira also strengthened against the Pound Sterling, gaining about N165 or 16.4 per cent to N840, from a record low of N1,005 per Pound.

Reacting, Director General of the Centre for Development of Small and Medium Scale Enterprises, Muda Yusuf, argued that Naira’s annihilation and its sudden rise have created serious anxiety and dislocation in the manufacturing sector.

“It has worsened the problem of uncertainty in the manufacturing sector because no one is exactly sure any longer where things are going.”

For Tajudeen Olayinka, an investment analyst, the rebound of the Naira can only be sustained if the rise happened naturally by adjustment of the imbalances on both sides of demand and supply.

“If this rise we have witnessed is an outcome of the forces of demand and supply. But we don’t have that information yet. Therefore, it will be too premature to conclude that the appreciation in Naira value is a natural occurrence.

Managing Director, Cowry Asset Management Limited, Johnson Chukwu, said that to save the naira, Nigeria needs to build an economy that is a net exporter of valuable goods and services to earn more dollars.

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