Expert asks CBN to sustain forex interventions as stock market hits all-year high

Uche Uwaleke, a professor and financial expert, says the Central Bank of Nigeria’s (CBN) intervention in the forex market is already manifesting positively in many sectors of the economy.

He asked the CBN to keep up the policy as the the capital market hit an all-year on Thursday.

On Thursday, the market capitalisation of the market hit N11,386,841,556,678.40, and all share index peaked at 32,937.98

Uwaleke, the head of department, banking and finance, Nasarawa State University, Keffi, said this in an interview with NAN on Thursday in Abuja.

The CBN recently injected $190 million into the forex market following the $240 million that was injected in April.

The move by the apex bank is in a bid to converge the rates between the interbank and bureau de change (BDC) segments of the forex.

The CBN said $100 million of the recent $190 million was offered as wholesale interventions and $50 million was allocated to the Small and Medium Enterprises (SMEs) forex window.

Also, $40 million was allocated to accommodate customers requiring forex for business, Personal Travel Allowance, tuition and medical fees.

Uwaleke said the resultant improved liquidity in the forex market was partly responsible for the retreating headline inflation from 18.72 per cent in January 2017 to 17.24 percent in April.

“It is also the main reason for the traction in business confidence as evidenced in the uptick in the Purchasing Managers’ Index above 50 points,” he said.

“The rebound in stock prices, thanks to the return of foreign investors, following the CBN’s special investors and exporters forex window.

“Without a doubt, the interventions by the CBN, enabled by the recent accretion to foreign reserves, is helping to fast track the country’s economic recovery efforts.’’

Besides, the don explained that the persistent high food prices was not unusual, saying “it is important to note that there is usually a lag between such interventions and the outcome in measurable terms’’.

He expressed optimism that the high prices of goods and services, including food items, would ease with time as the pass-through effects of lower exchange rates continued to rub off positively on prices of imported items.