SECTOR INSIGHT 30/05/2022
No Plans To Move Our Investments Away From Dollar, Says NSIA
Managing Director/Chief Executive of Nigeria Sovereign Investment Authority (NSIA), Mr. Uche Orji, has said the investment authority has no plan to re-dominate its assets from the United States dollar into other reserve currencies.
There had been speculations that NSIA could consider moving away from the dollar amid the current global dynamics occasioned by the Russia-Ukraine crisis, which appeared to have threatened the age-long dominance of the greenback.
However, Orji said he did not foresee an end to the dollar prominence, adding that the greenback has often been the preferred haven for assets in turbulent times.
Besides, he said many currencies seemed to have underperformed the dollar whenever there was a crisis, as it remained the currency of safety for most people.
Orji stated, “So for the NSIA, I think we are still going to remain fairly heavy on the dollar for some time.
“In terms of moving our investments away from the dollar, I think we are still a long way from any other world reserve currency. It is still complicated for the world to unwind into something else.
“When there is an economic crisis, there are probably three currencies people tend to hide their assets in: one is the US dollar, second is the Japanese Yen, and third is the Swiss Franc.”
The NSIA boss recently stressed that global inflation remained a significant disincentive to investments, adding that it has continued to distort the global economy. He also warned that financial performance of the NSIA in 2022 could be impacted by developments in the global and local environments given its exposure across the three funds under management, namely the Stabilisation Fund, Future Generation Fund, and Infrastructure Fund.
But Orji assured that the authority would take steps to strengthen the resilience of its strategy through diversification, portfolio selection, and other options to enhance the risk/ return profile and liquidity.
He said, “Reactions to the raging global inflation may lead to recessions in certain economies, as central banks have announced varying measures of rate hikes and halt to balance sheet expansion.
“The human and economic costs of the Russia-Ukraine conflict have continued to escalate, resulting in heightened geopolitical tension, disruption of the global supply chain, inflation, and potential impact on food security.”
Orji added, “The growth prospect in China will be undermined by its zero-tolerance stance on the emergence of COVID-19, leading to lockdown in different regions and cities.”
However, in view of the positive performances over the years, the NSIA MD said it was considering the idea of paying dividend to the shareholders of the fund, including the federal and state governments. But he pointed out that the gesture was subject to the approval of the National Executive Council (NEC).
According to him, the single biggest risk for the global capital market was complicated by the Russia- Ukraine war, as well as supply chain issues in China, as it struggles to contain the COVID-19 pandemic. “These are all factors that create headwinds into 2022.”