Chief Executive Officer (CEO) of Financial Derivatives Company (FDC) Limited Bismarck Rewane, has said the lifting of restriction to foreign exchange on 43 items would make much difference in the FX market.
According to a publication by FDC Whispers and made available to Blueprint, the naira depreciated to N1,180 per naira at weekend.
Rewane recalls that Nigeria made some audacious policy statements in June 2023, including the goal of exchange rate unification. As a follow-up to this policy, the CBN finally lifted the forex restriction on 43 items.
“Analysts have mixed views as to the impact of the lifting of the forex ban. Some are of the opinion that it will help stabilize the naira in the forex market, whilst others believe that the naira is in a free fall. The reality is that the Nigerian forex market is disequilibrated as a result of market structure and policy misalignment.
“It is our view that the naira will gravitate towards its fair value in the near term (2024). But until then, there will be gyrations and uncontrollable swings”, said FDC.
Average daily forex liquidity in the Nigerian Autonomous Foreign Exchange Market (NAFEM) dropped 22.49 per cent to $101.37 million in October 2023 from $130.78 million in the second quarter of 2023.
“This quandary deepens as Nigeria’s external reserves continue to fall ($33.24 billion), even with oil prices surging ($93.52pb). Although Nigeria’s oil production is still below its Organisation of Petroleum Exporting Countries (OPEC) quota (1.83 mbpd), it picked up again in September (1.35 mbpd). However, the inflow of dollars remains limited due to policy uncertainty and lingering security issues”, said Rewane.
It will be
recalled that in the second quarter of 2023, capital importation declined by 33.12 per cent to $1.03 billion from $1.54 billion in the second quarter of 2022.
