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Some finance
experts have commended the Central Bank of Nigeria for its attempt to
save the naira from falling freely, especially in an era when
currencies are struggling to maintain their value.

Ayo Teriba, the
managing director, Economic Associates, a finance research and
investment advisory firm, said the Central Bank made a good decision to
help the nation’s local currency.

“I think the
Central Bank did well in helping the naira by attempting to meet the
demand for Forex at the Forex market. If they hadn’t, it would have
resulted into the conversion of a global problem into a domestic one,”
Mr. Teriba said.

He said this on
Wednesday at the firm’s one-day conference on ‘Economic and Financial
Outlook in 2011’ held in Lagos. The event was to deliberate on outlook
for global and domestic markets for 2011, the extent to which the
post-crisis economic and financial rebalancing forces that currently
dictate the pace of global demand, commodity prices, and financial
markets are expected to continue into 2011.

“We were able to
hold rates reasonably stable, even though it costs us our reserves. The
Central Bank has helped stabilise our exchange rate even though it’s at
the expense of our foreign reserves,” he added.

Sanusi Lamido
Sanusi, the Central Bank governor, has said that the regulatory body
would not allow a free fall of the nation’s currency and that it would
also endeavour to meet foreign exchange demands at the auction markets.

Fairly stable outlook

Most members of the
audience from strategic planning units of various banks, pension funds,
and other finance firms agreed that outlook for the global and domestic
economy is fairly stable.

“Output for the
global economy is positive, as far as commodity prices are concerned.
We anticipate that there could be growth next year without as much
fluctuations as we experienced this year,” Mr. Teriba said.

Participants, however, pointed out that there may be uncertainties next year from political concerns and the elections.

While accepting
that likely election risks should be anticipated, Mr. Teriba says the
financial outlook for the nation is not likely to depreciate beyond its
present level.

Akintola
Akinbamidele, a Research Analyst, Renaissance Capital, an investment
firm, says sharp political uncertainty should be anticipated, which
could restrain investor participation in some of the nation’s markets.

“One main concern
arises from the increment in recurrent spending as a percentage of
total spending, which is projected at 75 percent in 2011 versus 49
percent in 2010. With historically low execution levels of capital
projects, the much needed period of sustained high economic growth will
be delayed. Exacerbating this scenario is the “potential” laggard
effect on project execution by newly appointed public officials
following an election period.

“We are of the
opinion that post April 2011 elections and into 2012, fiscal and
monetary policy will be mirrored. Thus the outlook for lower yield
outlook in 2012 should drive significant valuation on bond prices,” he
added.

He further said
that the firm’s major catalyst for its outlook is the nation’s
continuation in the anticipated reforms in power, oil and
infrastructure.

The conference was the fourth in a quarterly series of economic event by the firm this year.