Is The Naira Over-valued?
Tokunbo Ajibola, head of research Associated Managers, told CNBC Africa that the naira had been devalued twice in the past 12 months in November and February and foreign investors believed the currency was over valued by 20 per cent.
“The CBN has been trying their best to manage the naira but we expect the government to come up with a team that will manage the economy,” said Ajibola.
Ajibola called on the Buhari administration to enact policies that will attract wary investors.
“We expect to see pro-active policies from the Buhari government that will impact the economy and reassure investors who want to invest in the economy,” he said.
The Nigerian stock market has been operating on the red lately shedding over two per cent on Monday, as jittery investors off-loaded stocks.
Domestic headwinds and fears over the state of China’s economy are being blamed for the flight by investors to safe haven financial instruments.
However, Ajibola said it has not been all negative: “One of the factors that have held the equity market back has been strong liquidity.”
He said prior to the 2015 elections there was a lot of scepticism and concern about the country’s economic policies adding it was now time to move forward as these fears had been addressed.
“Liquidity in the past few years has been provided by foreign investors, and prior to the 2015 elections due to uncertainty a lot of investors sold their stocks and exited the market,” said Ajibola.
“Now that elections went well, we expect foreign investors to come back and trade in the Nigerian market.”
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