[vc_row][vc_column][vc_column_text]The Nigerian forex market was positively stunned by a 14% appreciation of the naira in 7 days after an extraordinary CBN intervention of $700m in the spot market. The naira had lost over 40% of its value in the last 9 months ever since the CBN announced a flexible exchange rate policy but unfortunately operated a managed fixed exchange rate market.<\/p>\n
Some analysts had hastily jumped to the conclusion that the structural misalignment of the currency was now resolved and that the naira will only appreciate further.<\/p>\n
We are of the view that the crisis of liquidity and confidence needs more than spasmodic quantities of dollar supply to restore confidence in the market.<\/p>\n
Without a transparent supply process and a commitment of funding for both tradables (imports) and invisibles (services) the naira will continue to oscillate.<\/p>\n
The crisis of supply can be temporarily addressed but the confidence deficit needs a much more comprehensive approach to achieve a level of exchange rate stability.<\/p>\n
At this month\u2019s LBS breakfast club session, Bismarck Rewane and the FDC Think Tank analyse the impact of the new forex process on the economy and business.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column]