The Nigerian stock market rose to its highest level since July 2008 on Tuesday, the first day of trading after the suspension of the Central Bank Governor, Godwin Emefiele.
According to a report by Bloomberg, investors are betting on a currency devaluation and sent the main index of the Nigerian Exchange to above 57,437 points, which contrasted with a flat performance for MSCI’s main emerging equity benchmark.
The report stated that this move takes the country’s stocks’ year-to-date gains to 11.8 per cent, almost double the six per cent return on the MSCI index.
It noted that the rally, which followed increased gains on Nigerian dollar bonds on Monday, reflected optimism over the policy signals from the newly elected President, Bola Tinubu.
The head of research at Chapel Hill Denham, Tajudeen Ibrahim, stated, “An improvement in the economy will enhance the performance of companies operating in the market.”
Since resuming office, the new president has scrapped fuel subsidy and recently suspended the apex bank’s governor, Emefiele.
The NGX Banking Index has since risen by 8.5 per cent to 570.64, its biggest advance in more than eight years.
Ibrahim, added, “The exchange rate convergence is expected to lead to improvement in liquidity in the foreign currency market and will increase trading activities for the banks.”
Meanwhile, pressure is mounting on the naira to fall towards its market value. The currency has fallen to 474 per dollar, with traders betting on further depreciation.