Naira’s appreciation will increase FPIs, boost investors’ confidence – Chioke

The yields in Nigeria’s naira will create a double effect – increase the inflows of foreign portfolio investments and boost investors’ interest in the economy – Ike Chioke, the general managing director of Afrinvest has said.

He disclosed this during the Sunrise daily show on Channels Television on Friday.

Chioke noted that given the recent record high monetary policy rate at 24.75 percent by the Central Bank of Nigeria’s Monetary Policy Committee (MPC), the domestic yield environment has become more attractive to investors.

“We have seen inflows, especially from foreign portfolios investors side, who are coming to take advantage of our very high yields,” he said.

“For an investor, an appreciation in the naira is a double effect,” he added.

Commenting on the upward trend of the naira to the dollar which exchanged at N1,255.07/$ at the official market on Thursday, he said the streak is expected to continue with the naira hitting N1,000 or below by the end of the year.

“Unless something extraordinary happens on the fiscal side, the momentum of progress towards an appreciating naira would probably continue for the next few months,” Chioke said.

As part of measures to control inflation and stabilise the naira, the CBN last month raised its benchmark interest rate, known as the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent in February 2024.

On June 14, 2023, the Central Bank of Nigeria (CBN) enacted several significant reforms which have so far calmed the FX market.

The reforms include the abolishment of market segmentation, consolidation of all segments into the Investors & Exporters window (now called the Nigerian Autonomous Foreign Exchange), and the reintroduction of the Willing Buyer, Willing Seller.

Also commenting on the CBN’s recapitalisation process, Chioke maintained that the exercise would strengthen the Nigerian banking sector and provide enough capital to boost the economy.

He stated that the recapitalisation is necessary for banks to enhance their resilience, solvency and capacity while continuing to support the growth of the Nigerian economy amid the prevailing macroeconomic challenges.

The GMD added that the move by the central bank would see the banking industry bigger and stronger, improving its credit facilities to businesses and reducing borrowing costs. 

While the present administration led by President Bola Tinubu aims to achieve a trillion dollar economy by 2026, Chioke noted that bank recapitalization becomes necessary to aid the growth of the economy. 

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