The coronavirus pandemic is spreading fast, triggering market slumps and changing the world with it but Nigeria’s Federal Government, its monetary and fiscal authorities appear to dilly-dally without taking swift measures to protect the country’s citizens and the economy.
India has temporarily suspended all tourist visas. Argentina, with 19 known coronavirus cases, also announced new travel restrictions on Thursday. The Czech Republic has imposed a similar 30-day travel ban for people from 15 “risk countries”. The US has imposed a month-long travel ban on 26 European countries.
However, at a press briefing on Friday, in Abuja, Osagie Ehanire, Nigeria’s minister of health said that Nigeria needs to avoid shooting itself in the foot by imposing premature travel bans.
Still on Friday, Godwin Emefiele, governor of the Central Bank of Nigeria said devaluing the naira is not yet in the cards as the currency is supported by good economic fundamentals. But the naira now exchanges for 410/$ down from N360/$ as many Nigerians seek to hedge against the risks of loss of value against the dollar.
Some say Nigeria’s economy managers may be living in denial and failing to take urgent and necessary measures to protect the economy.
The world’s biggest economies are already rolling out monetary and fiscal measures to cushion the effects on financial markets of coronavirus a pandemic that is pounding equities.
Nigeria’s economy has been caught in the cross-hairs. With oil being Nigeria’s biggest export, the government relies heavily on the resource for dollar earnings to fund its national budget. And with this year’s $37 billion budget passed with a benchmark oil price of $57 per barrel—nearly double its current price of around $33 to $36, Africa’s largest economy would struggle to fund its budget.
Meanwhile, Asian shares continued the global slump on Friday plunging deeper into the abyss, while European markets posted their worst one-day drop in history on Thursday.
Overnight, the sell-off on Wall Street was so severe that the Dow and S&P 500 experienced their biggest one-day declines since 1987, after triggering circuit breakers for only the second time in one week.
Markets are highly volatile with President Donald Trump’s travel ban on 26 European countries adding more fuel to the fire, now global stocks are ablaze. It seems the ongoing uncertainty from the coronavirus outbreak is set to continue burning the outlook for the global economy.
“What is more alarming is that these gut-wrenching declines across stocks have come despite emergency action by the Federal Reserve, Bank of England and European Central Bank to rescue markets,” Lukman Otunuga, senior research analyst at FXTM said in an emailed note.
There seems to be little faith over the effectiveness of monetary policy shielding the economy from the impact of the coronavirus, with fiscal measures seen as a better alternative in stabilising conditions.
Markets currently remain in panic mode with risk aversion the dominant theme. Equities across the globe are likely to remain severely depressed amid the darkening mood, with safe-haven assets like the Dollar and Japanese Yen, the best destinations for safety.
The dollar has regained strength as investors rush to safety. The greenback stood tall against every single G10 currency on Thursday, as investors sprinted towards the world’s most liquid currency amid the market meltdown.