The Nigerian stock market bounced back last week to profitability following the devaluation of the naira by 8.38 per cent as announced by Central Bank of Nigeria (CBN) on Tuesday. The market that had witnessed value devaluation for long recorded a gain of N163 billion at the close of market last week.

Trading activities picked sharply the day after the announcement of the new CBN measure with market indicators closing higher. Market capitalisation of equities listed on the main board of The Nigerian Stock Exchange (NSE) rose by 1.37 percent representing N154 billion growth to close at N11.417 trillion against N11.263trillion recorded on Tuesday.

In the same vein, the NSE All-share Index (ASI) appreciated by 1.37 percent to close higher at 34,583.29 points in contrast to 0.71 percent appreciation achieved previously.

A fortnight ago the Market Capitalization declined by N48 billion, thus ending transactions valued at N11.241 trillion. However, for the week ended November 28, 2014, the value of trades improved significantly as Market capitalization rose by 1.82 percent representing N163.17 billion gain to close at N11.404 trillion.

Some market operators interviewed during the week commended the CBN for the devaluation. One of the operators and doyen of stockbrokers of the NSE, Mr. Sam Ndata, said the devaluation of the naira was a step in the right direction as the exercise would attract more foreign investors and those who have exited the market prior to the devaluation may want to re-invest in the market.

Also commenting on the devaluation, another market operator, Mr. Charles Asuluka of Foresight Securities said it was a wise decision taken by the CBN. “It is good for the stock market. It should have been done before now because if it is not officially done, the naira would have, on its own accord, devalued itself because the signs were visible,” he said.

In his assessment, the Managing Director of APT Securities and Funds Limited, Alhaji Kasimu Garba Kurfi, commended the CBN for the devaluation adding that its multiplier effect would impact positively on the market as prices of stock were likely to resume upwards momentum. He said those who would have wanted to be off equities prior to the devaluation and retained the value in hard currencies may have a rethink as they can also safeguard the value of their wealth in assets.

The CBN devaluation of the naira pegged the official exchange rate at N168 to one US dollar from N155 in an effort to contain pressure on the local currency, brought on by the oil price slump.

The CBN, also for the first time in almost two years, decided to raise the Monetary Policy Rate (MPR), the benchmark interest rate, by 100 basis points to 13 per cent from 12 per cent.

The apex bank also adjusted Cash Reserve Ratio (CRR) on private funds held by the banks to 20 percent from the current 15 percent, effectively mopping up liquidity and sterilising an estimated N500 billion of banks’ deposits at zero per cent interest rate.

The decision to raise the MPR, CRR on private sector funds and devalue the naira on private funds was said to be aimed at restoring investors’ confidence and preserve macro-economic stability.

But in a related development, some university professors have described the recent devaluation of the nation’s currency by the CBN following the sudden drop in oil price at the international market been as “senseless and insensitivity.”

Professors Tunde Ogunsanwo and Okanlanwo Odusoga stated that the devaluation would inflict more pains on the citizens.

They made the statement at the investiture of Prof. Okanlawon Odusoga as the sixteenth President of the Sagamites Club in Sagamu on Saturday.

Ogunsanwo, who is a lecturer and former Dean of the Faculty of Sciences, Olabisi Onabanjo University (OOU), Ago-Iwoye, urged Nigerians to “rise and tell the government that she got it wrong with the devaluation of the naira giving its dire socio-economic implications.”

The immediate past president of the Philanthropic expressed the fear that the target of the devaluation might not be achieved.

“The devaluation of the naira is senseless and insensitivity of the government. The government is not in tune with reality. Nigerians should tell the government that you have got it wrong.

“When the price of oil was higher in the past than what was anticipated in the budget, what did we do with it? Supposing technology takes over oil tomorrow and oil is relegated to the background like coal, are we going to perish?”

However, Odusoga, the newly installed president of the club, a lecturer and consultant at the Obstetrics and Gynaecology Department of Olabisi Onabanjo University Teaching Hospital (OOUTH), observed that the nation’s healthcare delivery, which is currently poor and underfunded, could aggravate.

He said: “Unless the government reduces tuition fees, subsidises out-of-the pocket expenditure on medical treatment, undertake free treatment of diabetes, chronic hypertension, cancer among others, Nigerians may find it very difficult to finance quality healthcare service with devalued naira.”

•Source: Newswatch Times.