The International Monetary Fund (IMF) said yesterday that Nigeria was still on international investors’ radar despite currency controls being implemented in the country. It however, said worries about repatriating funds out of Nigeria following currency controls last year still dominates investor fears.
Miriam Tamene, an IMF senior financial sector expert, said there is interest in Nigeria’s securities market. However, investors were being careful because fears of getting trapped still exist.
Nigeria introduced capital controls following dollar shortages triggered by a currency crisis last year. The naira hit a record of 520 to the dollar, prompting the Central Bank of Nigeria (CBN) to restrict fund flows.
In April the bank liberalised the market to allow investors trade the naira at market-determined rates in a bid to attract inflows into debt and stock markets.
The stock market has gained 45 per cent so far this year, helped by demand for consumer goods and banking shares after the central bank lifted currency restrictions for investors.
Tamene’s comments came after her team visited Nigeria’s Securities and Exchange Commission (SEC) as part of consultations on developments covering the economy. The report of the consultation will presented to IMF board in February.
“Investors are interested in Nigeria, but with difficulties they had in getting their money out recently, that confidence is not there yet,” Tamene said in a statement released by the SEC.
Nigeria’s currency market for investors has traded $22.37 billion since it was launched, according to market operator FMDQ OTC Securities Exchange.
On Wednesday traders said some foreign investors were booking profits from treasury bills and bidding to repatriate funds abroad, creating a liquidity squeeze on the currency market, after debt yields fell.