An expert in the global and financial landscape has advocated the need for the Federal Government to shore up the country's foreign reserve to more than US$100 billion (N14.4 trillion) if it hopes to effectively curtail the impact of the global financial crisis on the country's currency and on the economy in general.
Speaking during the second annual conference on treasury, risk and cash management in West Africa in Lagos on Tuesday, Mr. David Cowan, African Economist, Citibank International disclosed that the decline in the naira since November 2008, has brought about a loss of confidence in the country's currency, resulting to an increased demand for foreign currencies as a store of value.
He noted that this huge demand has been the major factor militating against the stability of the currency, leading to its continued decline.
He said, "The problem for the Central Bank of Nigeria (CBN) was that it allowed a significant fall in the naira after a prolonged period of stability. This we think, created a crisis of confidence in the currency. The CBN would need reserves in the order of US$100 billion, or more, to act as appropriate insurance against this local demand for foreign currency at a time of crisis. This means that for that many Nigerians, the naira is not really seen as a reliable long-term store of wealth and, until this view changes, the CBN will have to hold reserves over and above what would be considered normal if it wisheto sustain confidence in the currency at a time of crisis."
He called on the federal government to put more effort in the attainment of its economic reform programme, and focus more in boosting agriculture production, stating that this will go a long way in ensuring economic growth and keeping inflation in check.
Meanwhile, The bearish trend in the Nigerian capital market continued Tuesday, as the value of listed equities on the Nigerian Stock Exchange (NSE) appreciated by N447.5 million.
Particularly, the value of listed equities represented by the market capitalisation rose by 0.01 per cent to close at N5.396 trillion from N5.395 trillion at which it opened. Another indicator, the All-share index rose by two basis points to close at 24,123.22 points from 24,121.22 points.
The rise in the market indices was occasioned by gains on the share prices of majority of the listed equities, with Oando Plc recording the highest share price gain, rising by N3.41 to close at N72.98 per share from N69.57 per share, UAC Nigeria Plc followed with a gain of N1.22 to close at N25.62 per share and Flour Mills Nigeria Plc garnered N0.82 to close at N17.30 per share.
On the contrary, Total Nigeria Plc recorded the highest share price loss, dropping by N7.48 to close at N142.27 per share from N149.75 per share, Nestle Nigeria Plc followed with a loss of N5.50 to close at N104.50 per share and Guinness Nigeria Plc dipped by N1.50 to close at N73.50 per share.
Equity trading appreciated 47.4 per cent, as a turnover of 358.5 million shares valued at N1.98 billion was recorded in 10,372 deals, sin contrast to the previous day's turnover of 243.23 million shares valued at N1.69 billion in 7,533 deals.
The Banking sub-sector dominated the other sub-sector, accounting for 59.23 per cent of the market turnover with $212.35 million shares valued at N1.47 billion in 6,552 deals.