By Olawunmi Ashafa
Lagos – A financial expert, Dr Samuel Nzekwe, has commended the CBN for its continuous interventions at the foreign exchange market in the bid to converge the official and parallel market naira exchange rates.
Nzekwe gave the commendation in Lagos on Wednesday in an interview with the News Agency of Nigeria (NAN) while reacting to the outcome of the Monetary Policy Committee meeting held on March 20 and March 21.
He advised the CBN to continue to intervene in the foreign exchange market because of many disruptions that had led to the wide gap between the official and parallel markets rates.
Nzekwe, a former President, Association of National Accountants of Nigeria (ANAN), said that round-tripping, hoarding and speculations in the foreign exchange market should be eliminated.
Nzekwe said that there had been clamour that the foreign exchange rate should be market driven, but this had been difficult.
According to him, the foreign exchange rate could only be determined by market forces when these disruptions were eliminated.
The former ANAN boss said that most of the challenges in the foreign exchange market were not internal issues, but rather external.
On whether the CBN’s continuous intervention would not pose negative impact on the country’s foreign reserves, Nzekwe said that there should be conscious efforts to achieve a balance.
He said that the only way the nation could get more foreign exchange was when the real sector was vibrant.
He suggested that productive sector of the economy must be kick-started to increase productivity, exports and foreign exchange earnings.
“The government should think of how to get the productive sector to produce more, export what we are not consuming and import less.”
NAN recalls the Monetary Policy Committee (MPC) agreed to leave MPR at 14 per cent, leave Cash Reserve Ratio at 22.5 per cent and liquidity ratio at 30 per .
The financial expert said these decisions were expected because of the inflation rate standing at 17.77 per cent.
Nzekwe said that it would still be difficult for those in the real sector to have access to funds from banks because of high lending rates.
He said that high lending rates had been discouraging operators in the productive sector from borrowing from banks because of the effect on cost of production.
Nzekwe said that the situation had made both corporate entities and individuals to invest their funds in treasury bills with yield rate currently at about 18 per cent.
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