• Thursday, May 23, 2024
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Naira rises, stocks fall as Cardoso faces FX backlog

Nigeria central bank to sanction fraudulent forex claims, governor says

The naira appreciated against the dollar on the parallel market while stocks dropped at the end of trading on Monday as markets await the clearing of foreign exchange backlog by Yemi Cardoso, the acting governor of the Central Bank of Nigeria (CBN).

Cardoso was recently appointed by President Bola Tinubu, alongside four deputy governors for a term of five years at the first instance, “pending their confirmation by the Nigerian Senate”.

The naira pared some losses to trade at 995 per US dollar on the streets on Monday after crashing to a new low of N1,050 last Friday. The official rate opened at N747 per US dollar. The gap, which disappeared in the first two days of the CBN’s reform in June, has reopened due to the scarcity of dollars in the official market.

Some currency dealers said the naira appreciation followed a moderation in demand as the foreign exchange market awaits policy action from the new CBN governor.

Read also: How Naira redesign and its aftermath affect free trade in Nigeria

At the stock market, the Nigerian Exchange Limited All-Share Index and equities market capitalisation depreciated by 0.66 percent or N242 billion to close at 66,882.64 points and N36.605 trillion from 67,324.59 points and N36.847 trillion respectively on Friday.

The CBN, in a statement on Friday, announced that Cardoso has formally assumed duty in an acting capacity pending his confirmation by the Senate. The statement noted that his assumption of office followed the resignation of Godwin Emefiele, who was suspended in June.

Experts who spoke to BusinessDay said they expect stability in the financial market following the appointments.

According to Uche Uwaleke, professor of finance and capital market at Nasarawa State University, Cardoso’s assumption of office in an acting capacity was necessary, saying it would impact the confidence of players.

He said: “Seeing him as a substantive governor sends the right signal to the financial market; it was clear that the former was acting and it is not right to have an acting governor for a long time, considering the importance of the bank.

“The market will be more stable now, with less distraction because Cardoso, even though acting, is the substantive governor. The market will see them as people that have come to stay.”

He added: “However, I expected the president would have waited for him to be confirmed by the Senate, or called for an emergency meeting to confirm him; this ensures that things are done following due process.

“Much as having a substantive CBN governor as quickly as possible is in the interest of financial markets, it’s important that due process, as stipulated in the CBN Act, be followed.”

Lawmakers went on their annual recess in August and are scheduled to resume on Tuesday (today).

Also speaking with BusinessDay, Muda Yusuf, the CEO of Centre for the Promotion of Private Enterprise, said: “There is nothing wrong with Cardoso assuming office in an acting capacity, just as we see in other institutions; leaders act before they are confirmed.

“The former leaders did a lot of damage and they needed to leave. All those who were there were asked to leave; so someone has to be there. That we have a substantive governor is a good development.”

Read also: Nigeria’s financial market seen stabilising as Cardoso assumes duty at CBN

Auwaal Ibrahim Rafsanjani, executive director of Civil Society Legislative Advocacy Centre, who said that Cardoso assuming office without confirmation of the Senate was not the right move.

He said: “There is a reason why the law say that leaders must be confirmed before assuming office.

“We had someone who was acting; why are we having another person also in an acting capacity? This inconsistency might send the wrong signal to the financial market. I think it is important we follow due process.