This was the position of investment analysts at Guaranty
Trust Holding Company Plc (GTCo) in a report titled: “Nigeria Macro-economic
Outlook for 2022”.
Besides the new policy thrust of the apex bank, they said
that diaspora remittance inflow, also expected to support the apex bank’s
ability to defend the Naira, would increase on the continuation of the
Naira-4-Dollar initiative.
Recall that the CBN recently introduced two policies to
improve FX liquidity in the market – non-oil FX rebate scheme and RT200 FX
programme.
While the former is a special local currency rebate scheme
for non-oil exporters who sell export proceeds into the I&E window, the
latter will entail the establishment of a dedicated non-oil export terminal
anchored on reaching a goal of US$200 billion in non-oil exports.
They said: “We applaud the CBN’s drive to significantly
improve FX liquidity in the market to reduce dependency on oil revenue and
foreign portfolio investments. We expect that the CBN’s capacity to defend the
naira will be buoyed by strong oil prices, healthy reserves, diaspora
remittances, and the newly introduced non-oil export schemes.”
Continuing, they said: “The CBN adopted the NAFEX rate as
the official rate in Q2 2021 and eventually devalued the naira to N435/US$1 on
the last business day of the year, representing a 6.12% y-o-y depreciation of
the naira at the I&E window in 2021. Notably, 2021 witnessed the continued
widening of the gap between the official and parallel market rates.
While we expect Foreign Portfolio Investors (FPI) inflows to
remain low as rates in developing economies normalise and the real return on
government securities remain negative, remittance inflow is likely to improve
on the back of improved economic activities in emigrants host countries and the
continuation of the CBN’s Naira 4 Dollar initiative.
“We also expect the CBN to continue to defend the naira with
more frequent interventions in the I&E window.
Overall, the regulatory authorities will maintain its hold
on the market as it continues to monitor activities in the market and will be
quick to implement policies to mitigate the developments that might negatively
affect its plan for a stable naira.”
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