By Odunewu Segun
Following the delay in announcing details of the new flexible exchange rates promised by the Central Bank of Nigeria, Nigeria’s banking index has plunged by 8.5 per cent.
The main share index fell 2.7 percent to 26,925 points by 1100 GMT, declining for a second-day, dragged down mostly by a sell-off in banking stocks. The All Share Index closed down 4.26 percent, its biggest daily drop in 16-months.
The index was dragged down by Zenith Bank and Guaranty Trust Bank, which fall 9.68 percent each, Diamond Bank drops 9.38 percent and First City Group falls 9.36 percent. Other decliners include Access Bank down 8.47 percent, Fidelity Bank, 6.77 percent, FBN Holdings down 5.06 percent and Ecobank transnational Inc. 4.72 percent.
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The Central Bank of Nigeria had last week after its Monetary Policy Committee meeting said it would introduce a flexible currency regime and abandon its 15-month naira peg to the dollar, a policy U-turn designed to boost exports, local manufacturing and stave off a recession.
However, the apex bank is yet to clarify how the new policy would work, spooking foreign investors, long worried about getting caught in the middle of a currency devaluation.
Meanwhile, FTSE Russell, a global index provider, has said it would assess the status of Nigerian equities in its “frontier” markets index during its annual review in September. “The continuing illiquidity in the Nigerian foreign exchange market is resulting in significant delays in the repatriation of U.S. dollars and hence the ability of index trackers to efficiently and cost effectively track Nigerian indexes.”
It also said that starting from June 20 corporate events such as IPOs and rights issues in Nigeria would not be reflected in the indices.