Naira Getting Better, Capital Market Gains Due To New Policy

The flexible exchange rate policy the Central Bank of Nigeria (CBN) announced on Wednesday has received some massive support in the money market. The policy will go into full effect on Monday.

The Naira and trading at the Nigeria Stock Exchange (NSE) have firmed up in response to the policy.

The International Monetary Fund (IMF), the European Union (EU) delegation to Nigeria and the Lagos Chamber of Commerce & Industry (LCCI), among others, hailed Nigeria for the policy.

Olisa Agbakoba (SAN) supported the policy which he believes will bring naira back to its deserved value in addition to making foreign exchange available for those who need it.

IMF spokesman Gerry Rice told a weekly news briefing that the Fund wanted to see how effectively the naira exchange market functions once the new float system becomes effective.

CBN Governor has said the bank expects the naira to settle at around N250 to the dollar after it abandoning the peg of N197 to the dollar it has supported for 16 months.

“I think the announcement yesterday to revise the guidelines for the operation of the Nigerian interbank foreign exchange market is an important and welcome step,” Rice told reporters. “It will provide greater flexibility in that market, the foreign exchange market.”

LCCI Director General Muda Yusuf said the Organised Private Sector (OPS) had consistently canvassed the new position taken by the CBN in the past 18 months.

He said the OPS expects an improved liquidity in the forex market, significant improvement in the allocative efficiency of foreign exchange and improved investors’ confidence.

Yusuf said the new policy will enhance the supply of forex to the market from capital importation, export proceeds and diaspora remittances.

On his part, Agbakoba (SAN) said, “I am confident that if well managed, Nigeria will be out of depression by the first quarter of 2017.”