Much Ado About JP Morgan
The 19 th century America was fondly referred to as the gilded age where the robber barons held sway. These ruthless capitalists controlled all sectors of the American economy and their expansionist agenda was the subject of dominant discourse in political circles. Prominent names in the infamous group included John Davidson Rockefeller, Cornelius Vanderbilt, Leland Stanford Sr, Andrew Carnegie, Gustavus Swift, George Hearst amongst others.
They all needed finance to expand their gargantuan ambitions and they all turned to one man to aid their goals – John Pierce Morgan who was the undisputed shark of New York. The wily banker ensured he had a piece of the pie in all the sectors of the economy by positioning himself strategically in the middle and demanding a place on the board of everyone he lent his money to.
The ghost of Morgan was resurrected when J.P Morgan announced plans to delist Nigeria from the Government Bond Index Emerging Market at the end of September and beginning of October.
Naturally, the Federal Government raised legitimate concerns as it would surreptitiously lead to a massive withdrawal of foreign equities which would have a concomitant negative effect on the already frail economy. These fears have however been blown out of proportion as the Federal Government has done the black race proud by sturdily standing up to these modern day imperialists who would stop at nothing to undermine our economy. They seem to want to step in to fill the lacuna left behind by the Bretton Woods Institutions whom a Buhari Presidency from the antecedents of the General is bound to loath.
Their removal grounds are ludicrous and it’s clear that they value the interests of foreign investors above that of our economy. In January this year, Nigeria was placed on the index watch as a result of their concerns in the operation of the forex market such as lack of liquidity for transactions, lack of transparency in the determination of the exchange rate and the lack of a fully functional two-way foreign exchange market.
Firstly, despite the fact that oil prices have tumbled by almost sixty percent in the last year, the Central Bank of Nigeria has ensured that all the genuine demands was met especially from foreign investors.
Secondly, the CBN directed all foreign exchange transactions were posted online in the Thomson Reuters trading platform for easy access by members of the public.
Thirdly, the official foreign exchange window at the CBN was closed to ensure a level playing field in the pricing of foreign exchange.
Fourthly, a functional two-way foreign exchange market already exists in the country. The activities of rent seekers, round trippers and speculators made it imperative for participants to go beyond merely trading currencies but also being in the market to fulfill genuine customer demands to pay for imports and other transactions. The CBN’s policies on foreign exchange so far has led to stability of the exchange rate in the interbank market for the past seven months and have largely eliminated the destructive role of speculators. The removal of this rule will lead to a large depreciation of the naira which is inimical to national interest.
This index removal will lead to a negative effect on the prices of current bond portfolios but the subsequent rise in bond yields should provide a new re-entry point for investors interested in naira denominated assets which will boost the inflows and the already battered naira which desperately needs a massive shore up.
The bold move by the CBN would make investors confident about the real returns in naira denominated assets. However they may need to reassess their portfolio in order to take advantage of the expected rise in bond yields while minimizing any potential losses arising from the fall in bond prices.
Is JP Morgan a shining light in virtues? Certainly not! They were once fined $20 billion for unethical conduct. They paid $13 billion in fines for swindling unsuspecting and innocent Americans in the mortgage scandal some years ago. They paid $6 billion for the infractions of the felon, Bruno Iksil and $2 billion for letting Bennie Madoff dupe starry-eyed investors in Uncle Sam.
They can’t be more catholic than the Pope and it is a good thing that the CBN stood up to this bullies of low morals and paid heed to the evergreen song by the Afrobeat maestro, Fela Anikulapo-Kuti who warned ‘Them don release you but you never release yourself’.
It is crystal clear that the sinister agenda of J.P Morgan is to get Nigeria to open our foreign exchange market and leave it at the mercy of the market demand. They want the naira to get devalued with disastrous consequences for the naira and economy. The naira currently exchanges between 197 and 200 naira to $1 at the official market and hovers between 216 and 220 naira to $1 in the black market. This is so because of the dogged steps the CBN has taken to curb round tripping.
Enough is Enough of western neo-colonialism! The CBN leadership has proven themselves worthy of admiration as they have not been cowed to sabotage the economy of the largest in Africa to satisfy the baboon like whims of a puppet master in far away New York. This is truly the dawn of the new era and as the great Civil Rights Leader, Martin Luther King Jr said ‘We shall overcome’