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From Walter Ukaegbu, Abuja
The Abuja Chamber of Commerce and Industry (ACCI) has supported the Central Bank of Nigeria (CBN) on the revised guidelines for operation of the Nigerian inter-bank foreign exchange market.
This is contained in a statement by the ACCI President, Mr. Tony Ejinkeoyen, and made available to Daily Sun in Abuja.
Ejinkeoyen said that the new CBN guideline was in line with the objectives of efficiency and facilitating a liquid and transparent foreign exchange market towards the liberalisation of the market.
“Although there is the fear of exchange rate risk of volatility, we believe that the flexible exchange rates are automatic stabilisers that can remove the economic frictions created by a fixed exchange rate.
“In addition, the CBN can implement autonomous monetary policies to address problems with inflation and output. Because monetary policies affect inflation rates, CBN can decide on its long-run inflation rate and doesn’t have to import its trade partners’ inflation rate, as is the case under a fixed exchange rate,” he said.
According to him besides this, the futures end of the foreign exchange market will allow for proper planning by businesses.
He said this is because most end users could originate deals for the future and it would be flexible enough that they can know what the exact rate will be at the time they need it.
“So, the policy is expected to provide some relief in the foreign market, as well as some kind of stimulus to the economy,” he said.
He observed that though the revised guidelines would devalue the naira but the dual exchange rate regime stands abolished.
According to him the exchange rate will be determined by market forces and it is expected that the difference between the official and black market rate will be drastically reduced.
He stressed that the policy was expected to attract inflow of foreign exchange into the economy and thereby helping to relieve the foreign exchange crisis in the country.
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