19 January 2015, Lagos – The Governor of Central Bank of Nigeria, CBN, Mr. Godwin Emefiele, has said it sold dollars to stem the Naira’s drop to a record low after JPMorgan Chase & Co. said the debt of Nigeria may be cut from its local-currency emerging-market indexes.
This came as the Nigerian Stock Exchange,NSE said it was seeking to attract companies from outside Nigeria to sell shares as slumping oil prices weighed on local businesses.
“We want to reposition ourselves as an exchange that takes care of entrepreneurial growth,” Chief Executive Officer Oscar Onyema said in Lagos, The NSE planned to “widen our geography so that we increase listings and support companies looking to raise capital in other countries,” he said.
“The equities gauge in Nigeria, which relies on the commodity for almost all of its exports, fell 32 percent since the end of June, with crude prices tumbling more than 50 percent in the period. The goal of reaching a $1 trillion market capitalization by 2016 is no longer possible because of the sell-off,” Onyema said.
Nigeria was placed on Index Watch Negative for JPMorgan’s GBI-EM indexes after central bank measures announced in December reduced foreign exchange and bond trading, making it difficult for foreign investors to replicate the gauge, the New-York based lender said on Friday. The CBN intervened after the announcement, according to Guaranty Trust Bank Plc.
“You have got a bunch of global investors who are benchmarked to the GBI and Nigeria is 1.8 percent of the index,” Kevin Daly, who has cut his holdings in naira debt to zero among the $13 billion in assets he manages at Aberdeen Asset Management Plc in London, said. “I doubt some of those investors would want to own it if it’s not in the index.”
Reacting to JPMorgan’s claim Central Bank Governor Godwin Emefiele disputed JPMorgan Chase & Co’s assertion that there was a lack of liquidity in the foreign exchange market and said the naira was correctly valued. “There is no truth in the assertion by the index team that they do not see the liquidity,” Emefiele said on Friday in Abuja. “There’s no reason to begin to take a look at” the naira’s value after the central bank devalued the currency in November, he said.
Nigeria was placed on Index Watch Negative for JPMorgan’s local currency emerging market indexes on Friday after central bank measures in December reduced foreign exchange and bond trading, making it difficult for foreign investors to replicate the gauge, the New-York based lender said in an e-mailed statement. The regulator intervened after the naira fell to a record low soon after the announcement, according to Guaranty Trust Bank Plc.
“We are very surprised at this action by the JPMorgan index team,” Emefiele said, adding that the Central Bank wasn’t consulted.
“We want to stay in the index and we’re doing everything to make sure we do.”
Nigeria, which depends on oil for 70 per cent of revenue , has been battered by crude prices plunging more than 50 per cent since June.