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Naira: Analysts Want Fiscal Authorities To Complement CBN’s Policies - NEW TELEGRAPH
As concerns mount over the volatility that the naira is currently showing, analysts at Financial Derivatives Company (FDC) have called on the country’s fiscal authorities to urgently introduce measures that would complement policies which the Central Bank of Nigeria (CBN) adopted to bolster the local currency last month.
The analysts, who made the call in a recent report, urged the fiscal authorities to take steps to boost exports in order to increase foreign exchange earnings, given that the level of the country’s external reserves affect the CBN’s ability to defend the naira. They stated: “The naira maintained a steady path to recovery in the review period as the CBN’s policies continued to provide stability in the forex market.
However, after appreciating by over 40 per cent in the span of six weeks to this year’s high of N1,090/$ at the parallel market on April 18th, the naira has slid back to N1,340/$ on April 24, on surging forex demand “The CBN has conducted sales of dollars to BDCs at a range of N1,021/$ – N1,101/$ in efforts to support the currency, increase dollar liquidity, and bring the FX market to a correction. However, Nigeria’s external reserves have continuously depleted over the last month to an almost six-year low of $32.11 billion on April 19.
This can impact the CBN’s ability to defend the naira.” The analysts further said: “Beyond the CBN’s measures, including the 600bps hike in the anchor rate and the recent 15 per cent reduction in the loanto-deposit ratio for commercial banks to 50 per cent from 65 per cent, it has become imperative for fiscal policy authorities to complement these policies.
