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Experts flay CBN’s FX management approach, seek end to price-fixing

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Chief Executive Officer, EFG Hermes Nigeria, Lilian Olubi, has said that the price-fixing regime in the foreign exchange (forex) market is a deterrent to Foreign Portfolio Investors (PFIs), enjoining the authorities to reduce focus on FX management.

Olubi said there has been a focus on managing the foreign exchange price and the effect of that action has a huge effect on others on the market, including dampening confidence.

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She, therefore, advised the Central Bank of Nigeria (CBN) to liberalise the market.

Olubi stated this at a virtual media round-table organised by the firm to discuss the shifts in investor appetite in East and West African equity markets.

Given the current dominance of local investors in the equity market, she stressed the need for more products to be floated in the Nigerian Stock Exchange (NSE) to increase options for local investors.

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Domestic investors accounted for 70.14 per cent of the capital market in January 2021, according to data from NSE.

According to Olubi, product unavailability also contributes to the low activity being witnessed in the exchange.

She opined that this has resulted in a situation where only about five securities control over 80 per cent of the entire market capitalisation, forcing investors to move their portfolio around the five stocks.

She listed the dominant stocks to include MTN Nigeria, Nestle, BUA Cement, Airtel, and Dangote Cement.

Also speaking, Chief Executive Officer, EFG Hermes Frontier, Ali Khalpey, said FPIs showed little interest in the Nigerian equities market, arguing that uncertainty around the forex rate and the possibility of repatriating dollars out of the country still posed serious challenges.

He said: “FPIs will not come knowing that forex market is managed and not market reflected. It is very difficult to attract capital when you are dealing with such low yields and high inflations and then you still try to control the forex rate.

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