Naira has fallen to around N1,320/$ at the parallel market, raising the uncertainty level of the foreign exchange (FX) market.
As at press time yesterday, the domestic currency shed 3.03 per cent from N1,280 it closed on Tuesday to trade at N1,320 against the dollar.
Analysts said the modalities for the financial system reform started by the current leadership of the Central Bank of Nigeria (CBN), Yemi Cardoso, are still unclear.
They told The Guardian yesterday that foreign banks may necessarily have to be allowed to acquire shares in existing financial institutions to boost FX liquidity.
Sources said the apex bank may consider introducing an offshore account exemption policy for strategic investors and a foreign direct investment initiative to establish offshore accounts as parts of strategies to increase dollar supply.
Experts said the steps would enable investors to conveniently deposit their proceeds sourced from equity and loan financing.
Under the envisaged policy, strategic foreign direct investors would be able to open offshore accounts to service their external debts, pay for foreign insurance and warranty claims, meet financial obligations to foreign contractors, cover their foreign capital investments and investment expenses.
It is believed that the current slide is influenced by mass demand for feedstocks after yuletide sales as well as pressure from students who are returning to schools abroad.
The poor performance of the local currency comes on the heels of the non-composition of the Monetary Policy Committee (MPC), which plays a crucial role in the formulation of the monetary policy and is also fuelling fresh anxiety in the market.
Over two weeks into the new year, the CBN is yet to publish the schedule of this year’s meetings, raising questions about its plan for the year.
The MPC has not held its meeting since Cardoso assumed leadership at the monetary authority. The last meeting was held in July while the last two for the year were called off.
Cardoso, at Bankers’ Dinner in Lagos, said the authority had fulfilled the yearly four-meeting statutory requirement for last year.
Investment banker, Tolulope Alayande, said the federal government does not have a strategy or a set of strategies that are aimed at boosting diaspora’s remittance just as demands for forex have remained unabated.
He said: “The issues are complex. The CBN still has not come out with a clear strategy on how to generate enough foreign exchange. Observations about the propensity for increased demand for FX at the beginning of the new year are valid. Some companies rely on imported raw materials.
“Those categories of companies will require FX that run into millions. The same goes for schools that will resume and people that will be going back to their base. These are activities that require FX in no small amount. These, I think, are the factors that are driving the foreign exchange upwards.”
