Operators in the nation’s capital market have urged the Central Bank of Bank (CBN) to urgently deploy structures that would help drive the policy of introducing flexibility in the interbank foreign exchange (Forex) market to stimulate the economy and trigger activities in the stock market.
The stockbroker, who spoke on the heels of the current upward rally and price appreciation in the stock market, occasioned by the recent pronouncement by the CBN plans to adopt a flexible foreign exchange regime and retain a small window for critical transactions for prospective investors, argued that CBN needed to urgently deploy the structure that would drive this policy.
Indeed, the market capitalisation, rose by N574 billion or 5.7 per cent, from N9,352 trillion recorded as at last week Tuesday when the pronouncement was made to N9,926 trillion last week friday.
Similarly, the All share index which measures the performance of listed companies rose by 1670.75 from 27,23150 to 28,902.25.
The Managing Director of Hycap Securities, David Adonri in a chat with The Guardian, explained that there has been clamor from both local and foreign investors since the current administration that government should establish flexible exchange policies to drive economic activities.
“Government have tarried with this policy for one year and as a result, the economy is almost sliding into recession and I believe that by next week, the economy will enter into recession.
“But however, the two big macro economic decisions has been taken, there is partial deregulation of price of petrol and CBN has given indications that it would adopt a flexible exchange rate policy.
“ CBN needed to urgently deploy the structure that would drive this policy. Once this structure comes on stream and is working, the impact would be felt on the capital market.
“They should take the economy out of recession and position it on the part of growth. The market does not react in perpetuity, it would react and stabilise and if there is any other positive policy, it would be sustained,” he said.
A stockbroker with Delloit Securities, Tunde Oyediran explained that the introduction of a flexible interbank market would boost investors’ confidence and trigger activities in the market.
He added that increased investors’ participation both local and foreign would attract the needed liquidity in the stock market.
The Managing Director of Crane Securities Limited, Mike Ezeh explained that with this policy, there is bound to be high foreign investment inflow into the country.
“Flexible exchange rate is like partial deregulation. That is why the market has been reacting positive ever since CBN came out of their last MPC meeting wit that policy. With this policy, there is bound to be high foreign investment inflow into the country.
