Boosting liquidity in Nigeria's Fx market
Nigeria's Finance Minister has attributed the fall of the naira to the low liquidity level in the FX market with the currency dipping to months low due to overdue forward payments in the foreign exchange market worth about 6.8 billion dollars. Dipo Ajayi, the Head of Fixed Income and FX market at Chapel Hill Denham, joins CNBC Africa for this discussion.
Fri, 22 Sep 2023 14:37:45 GMT
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AI Generated Summary
- Uncertainty in the market following the suspension of the CBN Governor and appointment of an acting Governor
- Efforts to clear the FX backlog and stabilize the naira amidst limited reserves and growing obligations
- Need for a proactive approach to attract foreign investors and boost liquidity in the FX market
Nigeria's Finance Minister has pointed to the low liquidity level in the FX market as the primary reason for the fall of the naira. The currency has dipped to a months-low due to overdue forward payments in the foreign exchange market, amounting to about 6.8 billion dollars. Dipo Ajayi, the Head of Fixed Income and FX market at Chapel Hill Denham, shed light on the current challenges facing the market in a recent interview on CNBC Africa. The discussion revolved around the recent resignation of the suspended Governor of the Central Bank of Nigeria, Godwin Emefiele, and the appointment of Olayemi Kadoso as the acting CBN Governor. Ajayi expressed concerns about the lack of clarity in the market following these changes, leading to investors staying on the sidelines. He emphasized the need for stability and a clear direction from the new CBN Governor to boost investor confidence. Ajayi also touched on the ongoing efforts to clear the FX backlog and stabilize the naira, highlighting the importance of attracting foreign investors to support the market. He emphasized the need for proactive measures to address the widening gap between the official and parallel market rates, as well as the urgent need for a liquid FX market to meet the growing demand. The interview provided valuable insights into the challenges facing Nigeria's FX market and the steps needed to restore stability and confidence among investors.
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