The naira appreciated against the dollar on the parallel market while stocks dropped at the end of trading on Monday as markets await the clearing of foreign exchange backlog by Yemi Cardoso, the acting governor of the Central Bank of Nigeria (CBN).
Cardoso was recently appointed by President Bola Tinubu,
alongside four deputy governors for a term of five years at the first instance,
“pending their confirmation by the Nigerian Senate”.
The naira pared some losses to trade at 995 per US dollar on
the streets on Monday after crashing to a new low of N1,050 last Friday. The
official rate opened at N747 per US dollar. The gap, which disappeared in the
first two days of the CBN’s reform in June, has reopened due to the scarcity of
dollars in the official market.
Some currency dealers said the naira appreciation followed a
moderation in demand as the foreign exchange market awaits policy action from
the new CBN governor.
At the stock market, the Nigerian Exchange Limited All-Share
Index and equities market capitalisation depreciated by 0.66 percent or N242
billion to close at 66,882.64 points and N36.605 trillion from 67,324.59 points
and N36.847 trillion respectively on Friday.
The CBN, in a statement on Friday, announced that Cardoso
has formally assumed duty in an acting capacity pending his confirmation by the
Senate. The statement noted that his assumption of office followed the
resignation of Godwin Emefiele, who was suspended in June.
Experts who spoke to BusinessDay said they expect stability
in the financial market following the appointments.
According to Uche Uwaleke, professor of finance and capital
market at Nasarawa State University, Cardoso’s assumption of office in an
acting capacity was necessary, saying it would impact the confidence of
players.
He said: “Seeing him as a substantive governor sends the
right signal to the financial market; it was clear that the former was acting
and it is not right to have an acting governor for a long time, considering the
importance of the bank.
“The market will be more stable now, with less distraction
because Cardoso, even though acting, is the substantive governor. The market
will see them as people that have come to stay.”
He added: “However, I expected the president would have
waited for him to be confirmed by the Senate, or called for an emergency
meeting to confirm him; this ensures that things are done following due
process.
“Much as having a substantive CBN governor as quickly as
possible is in the interest of financial markets, it’s important that due
process, as stipulated in the CBN Act, be followed.”
Lawmakers went on their annual recess in August and are scheduled
to resume on Tuesday (today).
Also speaking with BusinessDay, Muda Yusuf, the CEO of
Centre for the Promotion of Private Enterprise, said: “There is nothing wrong
with Cardoso assuming office in an acting capacity, just as we see in other
institutions; leaders act before they are confirmed.
“The former leaders did a lot of damage and they needed to
leave. All those who were there were asked to leave; so someone has to be
there. That we have a substantive governor is a good development.”
Auwaal Ibrahim Rafsanjani, executive director of Civil
Society Legislative Advocacy Centre, who said that Cardoso assuming office
without confirmation of the Senate was not the right move.
He said: “There is a reason why the law say that leaders
must be confirmed before assuming office.
“We had someone who was acting; why are we having another person also in an acting capacity? This inconsistency might send the wrong signal to the financial market. I think it is important we follow due process.