Lagos, – The Nigerian stock market experienced a remarkable surge on Tuesday, reaching its highest level since July 2008. This significant upswing occurred on the first day of trading following the suspension of Godwin Emefiele, the Central Bank Governor.
According to a report by Bloomberg, investors have been speculating on a possible currency devaluation, driving the main index of the Nigerian Exchange to surpass 57,437 points. This performance stands in contrast to the flat performance of MSCI’s main emerging equity benchmark.
The report highlights that this rally has propelled the year-to-date gains of Nigerian stocks to 11.8%, nearly double the 6% return on the MSCI index. It further notes that the surge, accompanied by increased gains on Nigerian dollar bonds on Monday, reflects optimism surrounding the policy signals from President Bola Tinubu, who was recently elected.
Tajudeen Ibrahim, the Head of Research at Chapel Hill Denham, emphasized that an improved economy would positively impact the performance of companies operating in the market.
Since assuming office, President Tinubu has implemented measures such as the removal of fuel subsidies and the suspension of the Central Bank Governor, Emefiele. As a result, the NGX Banking Index has experienced a significant rise of 8.5% to reach 570.64, marking its most substantial advance in over eight years.
Ibrahim added, “The expected exchange rate convergence will enhance liquidity in the foreign currency market and boost trading activities for the banks.”
Meanwhile, the pressure on the Nigerian naira to depreciate further towards its market value continues to mount. The currency has already fallen to 474 naira per dollar, with traders anticipating additional depreciation in the near future.
