Naira sinks to N615/$ as foreign investors worry over dollar scarcity

Foreign investors are worried over continued scarcity of dollars in Nigeria even as the naira today depreciated to N615 per dollar in the parallel market today.

TheNewsbeam findings showed that the parallel market exchange rate rose by N10 to N615 per dollar at the close of business today from N605 per dollar on Friday.

Similarly, the naira depreciated in the official market as the indicative exchange rate for the Investors and Exporters (I&E) window rose to N421 per dollar today from N420.12 per dollar on Friday, translating to 88 kobo depreciation for the naira.

The continued depreciation of the naira is driven by scarcity of dollars which according to foreign investors is making it difficult for them to repatriate the investment proceeds out of the country.

“Since March 2020, accessibility issues have persisted in the Nigerian equity market. The repatriation of funds from investments in the market remains extremely difficult for foreign investors due to low liquidity in the Nigerian foreign exchange market”, said Mr. Craig Feldman, Global Head of Index Management Research and member of the MSCI Index Policy Committee.

Feldman stated this in a statement by MSCI last week, titled, “Consultation on Potential Reclassification of the MSCI Nigeria Indexes to Standalone Markets Status”

Among other things, the company said that due to investors’ concerns over dollar scarcity in Nigeria, it has launched a consultation on a proposal for potential reclassification of the MSCI Nigeria Indexes from Frontier Markets to Standalone Markets status.

“There has been a continual and severe deterioration in the ability to repatriate funds from Nigeria. As a result, since May 2020, a special treatment has been in place to reduce the number of potential changes in the relevant MSCI Equity Indexes.

“Given the prolonged nature of the issues affecting the market’s accessibility, we have put forth the consultation to reclassify the MSCI Nigeria Indexes from Frontier Markets to Standalone Markets status”, said Feldman.

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