The renewed pressure on the exchange rate forcing naira to keep downing as if nothing is being done to contain the challenge is encouraging experts to open up on way forward.
Chief Economist and Head of Research at FSDH Merchant Bank Limited said “The monetary authority should ensure that it does not bow to the current pressure to reduce the interest rate. “If the yields on the fixed income securities are above the inflation rate, foreign portfolio investors, FPIs, may soon be bringing investments to Nigeria and thus increase the supply of forex.
“Also the fiscal authority should communicate clear policies to drive the economy so that private investments (both local and foreign) can come in. “Government should also ensure that the Petroleum Industry Bill, PIB, is passed so that the IOCs can have a clearer direction of what to expect.
“This will stimulate investments in that sector and ensure that foreign exchange flows in. The government can also consider selling the proposed 5% stake in the NLNG through a transparent process.
“The CBN has been managing the exchange rate at the interbank market so that it does not move so much beyond a particular range. This gap may continue until there is adequate supply at the inter-bank market.
Continuing, he recalled that “The major driver is the plunging oil receipt on account of low oil price and production.
“Recall that oil exports had dominated our foreign exchange earnings in the last few years accounting for more than 70% of our export proceeds.
“The Foreign Direct Investment (FDI) has also dropped drastically because of no clear policy direction on the part of the government.
“The International Oil Companies (OICs) have stopped investments because of no clarity in respect of Petroleum Industry Bills (PIB). The Foreign Portfolio (FPIs) have also dropped drastically because of foreign exchange instability and weakness in the economic fundamentals of the country.