New foreign exchange policy will attract portfolio investors, says economist
An economist, Dr Aminu Usman says the new Foreign Exchange (FX) policy recently introduced by the Central Bank of Nigeria (CBN) will encourage portfolio investors to return to the economy.
Usman, a lecturer at the Department of Economics, Kaduna State University, Kaduna said this in an interview with the News Agency of Nigeria (NAN) in Abuja on Monday.
He said that the return of portfolio investors might invariably increase the supply of FX to the market and enhance liquidity.
NAN reports that the CBN had on June 15 unveiled new guidelines in the management of FX which would be determined by the market and primary dealers.
The new guidelines are part of the CBN’s mandate to foster depth, stability and liquidity in the forex market.
The CBN has the responsibility to enhance the transparency, efficiency and effectiveness of the market.
One of such efforts is to deepen the inter-bank FX market by establishing an institutional framework for Primary Dealership in FX products.
Usman said that the FX policy was a welcome development even if only to close the gap between the two markets which fuel corruption and other abuses.
He said there would be improved liquidity which may cause the rates to rise in favour of the Naira.
The don, however, said that the Federal Government had technically devalued the Naira with the introduction of the policy, which he said the government had resisted all along.
“The rates adjustment may not cause the kind of inflationary pressure expected to happen, simply because market had already adjusted.
“The common man on the street is already aware that dollar rate has gone up and prices of commodities have gone up.
“This announcement will not change that view significantly.
“However, as the implementation begin, we will see the market focus and project likely scenarios going forward,’’ Usman said.
NAN reports the Inter-bank trading under the new guidelines begins on June 20, while the tenors and rates for the OTC Naira-settled FX Futures will be announced on June 27.