Keep Only The Dollars You Need -- Standard Chartered Bank Speaks On Naira Volatility

 Financial institution, Standard Chartered Bank has charged Nigerians against hoarding dollars due to the volatility in the foreign exchange market.

The bank gave the charge during its global market outlook on Friday.

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The bank Head of Financial Markets & Rates & Credit Trading, West Africa, Ayodeji Adelagun, at the event said that with the unstable naira, it is the time to buy only as many dollars as required for use per time.

  “This is not the time to speculate, it’s not time to stockpile. It’s time to get only what you need. If you need to pay for something, buy what you need and move on", Adelagun said.

Adelagun noted that the volatility seen with the naira was due to attempts of the Central Bank of Nigeria to mop up excess liquidity.

“The Central Bank is trying to mop up as much liquidity as possible to reduce the volume of cash chasing FX. The moment we will begin to get to normalcy and FX liquidity is available, and then we will begin to see the effects of some of these policies right now. So, everything is a derivative of FX management.

“In getting to the point where liquidity should improve, foreign portfolio investors are likely to get interested in Nigeria and there is a chance that we can raise money through the Eurobond.”

He said the biggest worry for foreign portfolio investors was the lack of ease of entry and exit.

“And that is because the price in the market does not necessarily tell us where the currency should be traded. Recently, we saw the FMDQ begin to publish prices that are fairly reflective of where the market rates are. What this does is to open the door for foreign portfolio investors to bring in their money because they are likely to have a market rate.

“It is not going to happen as quickly as we want it to happen, but this is a good development, in which case there is a likelihood that we’ll begin to see a few of them coming. The moment the market continues to adjust and it is perceived to be positive, it begins to open the door for us to go to a Eurobond issuance,” he added.