An efforts to stabilise the naira through clearance of $7 billion forex forwards backlog and injection of nearly $10 billion foreign capital will not yield substantial results in stabilising naira until they are backed with inflation-arresting policies, analysts have said.
In its monthly market report released at the weekend, analysts at Afrinvest West Africa said it would be helpful to accompany such a move with inflation-arresting policies to present a compelling narrative for the Naira.
“Price pressure persisted as consumer prices rose for the ninth consecutive month. Particularly, headline inflation advanced year-on-year from 25.8 per cent in the prior month to 26.7 per cent, 68 basis points lower than our projection. Pressure points across the food (up 30.6 per cent year-on-year) and core (up 21.8 per cent year-on-year) baskets drove this uptick,” they said.
Continuing, they advised economic managers on way forward. “In our opinion, longer- term strategies should be focused on moving the economy from being hot-money-reliant to Foreign Direct Investment- based,” they said.
The naira at the weekend sustained week-long rally after the Central Bank of Nigeria (CBN) and commercial banks cleared $7 billion forex forward backlog, pending for months.
