Naira devaluation advocates selfish – Analyst

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Managing director, Thaddeus Investment Advisors and Research Limited, Mr. Jude Fejokwu, has described as selfish, calls for the Central Bank of Nigeria (CBN) to devalue the Naira.


Fejokwu who also urged the CBN Governor , Mr. Godwin Emefiele,  to stick to his position on the issue noted that the clamour for commodities export dependent (especially oil) African countries to devalue their currencies, “is largely driven by global economists across the spectrum loyal to economic theory and the countries they are domiciled in, portfolio managers and large commercial banks in the countries of focus with net positive (more dollar inflows expected than dollar outflows) dollar exposures.”


Specifically, he said those advising the CBN to devalue the naira are, “Out for their own interests and those they may represent.

This advice while portrayed in a selfless manner for the good of Nigeria and other African countries, is actually driven by selfish interests in my opinion.  Unfortunately, those in the local environment that will greatly suffer from any further devaluation of the Nigerian or other African currencies do not have the platform to speak out vociferously and make their case.”


Specifically, he argued that foreign portfolio investors were pushing for devaluation because they stood to make a lot of money if the naira is devalued.


He said, “foreign portfolio investors who need to make returns periodically to their capital providers and explain their investment decisions beyond the publicly available fact sheets.  A further 10 per cent devaluation will enable them to buy 10 per cent more stock value with the same amount of dollar transfer.

You will argue that they are already negatively exposed due to existing positions.  I tell you this, there is more money ready to be invested in the Nigerian equity market than is already in open positions.  Therefore, in a net sum game, a further devaluation will give foreign portfolio investors more profit (holding prices constant) if they enter and exit after a further devaluation just because of a further currency devaluation.”


Baesides, he said,  “The further devaluation of the naira, cedi, and Kenyan shilling etc;  will benefit non-natives and punish natives.  This is a classical case of shooting oneself in the foot.  Africans do not do it; short-term gains (where applicable) will be offset by longer-term pains.

Enough is enough.  Ninty-five per cent or more of the people clamuoring across the media for Nigeria, Ghana and Kenya to further devalue, do not live in these countries AND where they do, are wealthy enough, to not be bothered by the inconveniences experienced by many of their fellow citizens.” 
 
Fejoku noted that Nigeria had already devalued its currency by 25per cent between October 2014 and February 2015, pointing out that this was, “the same percentage devaluation carried out by Dr. Soludo in December 2008 for the same low oil price reason (N120 to N150).”


He advised CBN Governor, Mr. Emefiele, to maintain his position on naira devaluation, warning  that how he handles the issue could determine his legacy.


He said, “Any further devaluation, by Mr. Emefiele officially, will be his legacy and not a good one in my opinion.  It is time to stand up for pockets of people and not pockets of interests.  I like his defiant stance to not budge any further and hope he keeps to it.  Hang in there buddy.”


He pointed out those countries that take the step of devaluing their currencies usually discover that they have to do so over and over again without deriving the expected benefits.


Indeed, according to him, instead of benefits, such countries have to contend with adverse consequences such as rising inflation, high unemployment

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