Mr. Uche Orji, who is the Managing Director and Chief Executive Officer of the Nigeria Sovereign Investment Authority (NSIA), said that the investment authority has no plans to move its assets from the US dollar to other reserve currencies.
People thought that the Russia-Ukraine crisis, which has changed the way the world works and seemed to threaten the dollar’s longtime dominance, could make NSIA think about moving away from the dollar.
But Orji said he didn’t think the dollar’s dominance would end any time soon. He also said that the greenback has often been the safest place for assets in times of trouble.
Also, he said that when there was a crisis, many currencies seemed to do worse than the dollar, which most people saw as a safe currency.
Orji said, “So, for the NSIA, I think we’ll still be pretty heavy on the dollar for a while.”
I don’t think we are close enough to any other world reserve currency to move our investments away from the dollar. Still, the world is hard to change into something else.
“When there is an economic crisis, people tend to hide their money in three different currencies: the US dollar, the Japanese yen, and the Swiss franc.”
The head of the NSIA recently said that global inflation is still a big reason why people don’t want to invest and that it has also continued to mess up the global economy. He also said that changes in the global and local economies could affect the NSIA’s financial performance in 2022. This is because the NSIA’s three funds, the Stabilisation Fund, the Future Generation Fund, and the Infrastructure Fund, are all exposed to these changes.
But Orji promised that the authority would take steps to make its strategy more stable through diversification, portfolio selection, and other ways to improve the risk/return profile and liquidity.
He said, “Reactions to the roaring inflation around the world could cause recessions in some economies since central banks have said they will raise interest rates and stop adding to their balance sheets in different ways.”
“The human and economic costs of the Russia-Ukraine conflict have continued to rise, which has increased geopolitical tension, disrupted the global supply chain, caused inflation, and could affect food security.”
Orji also said, “China’s zero-tolerance policy on the spread of COVID-19 will hurt its growth prospects and lead to lockdowns in different regions and cities.”
But because the fund has done well over the years, the NSIA MD said they were thinking about giving dividends to the fund’s owners, which include the federal and state governments. But he said that the move would only happen if the National Executive Council agreed to it (NEC).
He said that the Russia-Ukraine war and supply chain problems in China, where the COVID-19 pandemic is hard to stop, were the single biggest risk for the global capital market. “All of these things will work against us until 2022.”
- Tags: Invvestment, Nigeria, NSIA
