The Managing Director and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu has attributed the noticeable rebound of the Nigerian currency- the Naira in the last one week to the Central Bank of Nigeria (CBN)’s reversal of its restrictive policies.
Chukwu who spoke exclusively to Primetime Reporters in Lagos on Wednesday stated that reversing of some of the restrictive policies as it relates to foreign exchange management by the CBN was so glaring that the apex bank now allowed customers to pay cash into their domiciliary accounts as well as allowed transfer of up to $10 per day be made from domiciliary accounts based on cash lodgings.
“We want to see CBN now removing restriction of use of Naira Card for international payments and withdrawals in POS outside the country. So, these factors are positive in the sense that they are leading to the liberalization of the FX market. So, we are seeing some dosage of regulations and the implication of that is that we have seen reversal in the depreciation of Naira in autonomous market. We have seen naira crawl back from N305 to about N298 within a week of CBN reversal of its restrictive policy”, he said.
He went on to say that it was a sign that should CBN decides to eliminate the official market and then allow naira to float, then there may be every likelihood that naira would rebound at the autonomous market thereby seeing the currency exchange for about N280 to N250 contrary to what obtained in the autonomous market now of N290 to N295.
According to him,” I think having tested the waters, CBN will now, I believe in the near future, take a bold step to liberalize further and allow portable inflows into the country.
On the stoppage of supply of dollar to the operators of Bureau de change (BDC), the financial expert averred that if the CBN ceased completely from supplying the BDCs, it had to evolve another means of injecting dollar cash liquidity into the system otherwise the available liquidity in the system would dry off and then the exchange rate would start going up again.
“If you look at the structure of the economy, you will realize that the Central Bank is the recipient of more than 90% of forex in the earnings. So, that means that it is the dominant market maker of supply of FX. So, they are the ones that creates liquidity in the system, if the cease completely from supplying the BDCs, they have to evolve another channel of injecting cash liquidity into the system otherwise the available liquidity in the system will dry off and then the rate will start going up again.
“It is either they sell to the BDCs or they have to sell directly to the banks but they have just to create an avenue of supplying liquidity to the system because they receive more than 90% of the total earnings. If you have multiple recipients, you will also have multiple suppliers. If the Central Bank liberalize the receipt of our export proceed from sell of crude oil to other banks, then other banks will supply and other autonomous sources will supply. ”, he said.
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