Ahead of the outcome of the ongoing meeting of the Monetary Policy Committee of the Central Bank of Nigeria, the Global Chief Economist, Renaissance Capital, Charles Robertson, has commended the steps taken to tackle the currency crisis plaguing the country.
Speaking in an emailed note on Tuesday, Robertson said, “Nigeria is getting it right… The gap between the official rate and the parallel rate is down from an uninvestable 80 per cent to 20 per cent.”
The CBN had on June 20, 2016 abandoned its 16-month peg of N197-N199 to the United States dollar, allowing the naira to float freely.
The central bank on Friday relaxed the ban of foreign exchange sale to Bureaux de Change operators by directing agent banks to approved international money transfer operators to sell forex accruing from inward money remittances to licenced BDCs.
The naira, which has been weakened further in recent days, fell to a new closing low of 310 to the dollar at the interbank market on Monday. It depreciated to 378 against the greenback at the parallel market, down from 375 on Friday.
Robertson said, “As we keep telling investors – have a look at Nigeria – they are clearly much closer to a clearing rate for the currency (our Real Effective Exchange Rate 20-year fair value estimate is 315-320/$).
“By contrast, Egypt with its recent measures to squeeze liquidity provided to Bureaux de Change is echoing what Nigeria did a few months ago and is currently heading in the wrong direction.”
Angola is in a strange world of its own – with a differential of over 70 per cent, the RenCap economist said.