Emeka Ucheaga Advisory

Dear Speculators, In 2015, the wide variation between the official exchange rate and the parallel market was a major source of economic concern for Nigeria, a country frequently described as an import dependent nation (I have my reservations on describing Nigeria as such but I choose not to digress from the discussion at hand). During this period, the continuous fall in oil prices reduced the foreign exchange earnings of the country. The Dollar was scarce in both the official and parallel market, leading to a rapid rise in the dollar rate in the later while the Central Bank was left to defend the peg in the former by depleting the external reserves. Whereas, the easier alternative would have been to devalue and stabilize the exchange rate at a new and fairer level to reflect the prevailing economic fundamental. Fast-forward to mid-2016 when the Naira devaluation was overdue and the Naira had greatly depreciated in the parallel market, the Central Bank decided to float th...

Dear Speculators, My rational nature constantly forces me to believe that other humans are alike and will deliberately take rational decisions at every opportune moment. However, the irrationality of some may bias the opinions of others which eventually lead to a rather nonsensical conclusion to a simple and clear event. We have learnt once again that the ideology which resonates best among the populist do not depend on the soundness of the message but how it aligns to their innate desires. Maybe I'm a sucker for the status quo or I'm more inclined to prefer certainty to uncertainty but we will have to wait and see the ensuing consequences to this shocking decision. I congratulate Donald Trump and his "deplorables". I hope for their sake they do not regret this decision in similar fashion as most Nigerians do with Buhari. Americans are smart?? We might have overstated their intelligence. The broad sentiments in the global markets may be negative as inve...

Dear Speculators, The gloominess of the Nigerian economic outlook has significantly knocked down the prices of some financial assets but the real value of some of these assets have been mildly affected. While recounting the economic misfortune that has befallen the country in the last two years is inevitable, dwelling on the past is a perfect time wasting activity. Luckily, investment is forward looking and not regressive thinking. The past is a great indication of the future but not a mirror for prediction. The randomness of the world ensures that yesterday looks at least slightly different from tomorrow. And if we have learnt anything from the history books, it is that good things do not last forever and bad times always have an end. Life is by definition cyclical. The key questions to ask before buying or selling any financial asset is; will the current economic situation last forever? Will the inflation rate remain in double digits over the next 5 years? Will the Nai...