By CHIOMA OBINAGWAM
THE call for further devaluation of the Naira (Nigeria’s legal tender) has been said to be a major ingredient that would stimulate increased investment in the country.
The Managing Director of CSL Brokers, Mr. Gboyega Balogun, disclosed this during an interview with National Daily, recently.
He, however, noted that the major reason foreign investors are shying away from investing is because they are not in support of Nigeria’s macro-economic blue-print, which excludes devaluation of the currency.
Looking at the rate at, which the external reserves have depleted to as well as the depressed oil prices, he said, the foreign investors foresee an impending devaluation.
Nevertheless, failure to devalue has placed everything on hold, increased volatility and erodes confidence.
He said: “But as of today, it will make no sense for somebody to invest in Nigeria, when they know that the country could devalue and are uncertain of the magnitude of the devaluation. They are still thinking of devaluation. If I am to look at it from the stock market perspective, would you as an investor put money in a stock in Nigeria that is valued at $1.00 today when you know in two weeks’ time, it is going to be valued at $0.50 or worse?.”
“For foreign investors, it makes sense that the sooner you devalue, the quicker foreign investors will come in,” he continued.
Recall that a recent report from Standard and Poors (S&P), a rating services firm showed that Nigeria should embark on a gradual of phased devaluation of its Naira.
“Investors have seen a devaluation of the naira as long overdue in Nigeria which has been greatly weakened by the slump in oil prices,” it indicated.
Despite economic crisis in addition to advice from both local and international pundits, Nigeria’s President Muhammadu Buhari is still against devaluing the naira.
He said likened the devaluation of the Naira to having it killed and is confident that the economy will soon witness a rebound. Nigeria’s government has kept the naira pegged at around N198 to the dollar on the official interbank market, while restricting access to dollars, which significant gap from the parallel market at N305.