Godwin Emefiele, CBN Governor

Mr Ayo Teriba, Chief Executive Officer, Economic Associates has urged the Federal Government to seek other measures of solving foreign exchange (FX) issues besides the new guidelines it just introduced.

He said this in an interview with the News Agency of Nigeria (NAN) on Thursday in Abuja while reacting to the Central Bank of Nigeria’s (CBN) guidelines on the new FX guidelines.

NAN reports that the CBN on Wednesday unveiled new guidelines in the management of FX which will be determined by the market and primary dealers.

The new guideline is 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.

Teriba said that the new policy was inevitable but that it was only a response to the present crisis and not entirely the solution.

“It was inevitable, government resisted it for more than a year but it got to the point where they had to face the reality.

“It is a response to a crisis, Nigeria still needs to come up with a strategy to deal with the crisis, we cannot respond to the crisis just by letting the market determine the exchange rate.

“They have to put policies in place that will ensure that we generate foreign exchange from alternative sources other than export’’, he said.

He, however, said that the situation was not hopeless for Nigerians as it might help in bridging the gap between the official rate and the parallel market rate.

“If devaluing the official rate closes the gap between the two and you devalue the official rate and the autonomous rate appreciates we will benefit.

“If the official rate is devalued as a result of the flexibility, the autonomous rate might indeed appreciate and drop below N300 which means that is a benefit for the common man and everybody else.’’

The President, Times Economics Ltd., Dr Ogho Okiti said that the new measures were long overdue.

He said that some of the innovations introduced to the FX market would not only ensure liquidity and access to foreign exchange but will also deepen the Nigerian financial market.

“Without a doubt, the policy will remove uncertainty and lure back the inflow of foreign investments into the Nigerian economy.

“Even though it could take several months, we anticipate the gradual erosion of the huge backlog of unmet FX demands.

“Once the newly established single market is in full operation, we also anticipate that much of the FX demands currently lined in the parallel market will be pushed back into the inter-bank market which will markedly reduce the significance of Bureaux De-Change (BDCs).’’

Okiti also said that the new measures were in line with the expectations of the market.

He said that for a long time the market has called for a more flexible exchange rate mechanism.

“The expectations are that it would attract foreign exchange inflows and improve liquidity, ease restrictions on access, and provide a basis for a market determined rate.’’ (NAN)