• Saturday, June 15, 2024
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BusinessDay

Peter Obi to remove FX restrictions, adopt single market

Obi notches most Twitter followers since presidential race began

Peter Obi, presidential candidate of the Labour Party (LP) has promised to remove forex restrictions and insist on a single forex market, if he wins the election.

He disclosed this on his Twitter handle on Thursday. Obi said the current system penalizes exporters who bring in forex by forcing them to sell at a rate that they are unable to source for when they need to purchase forex.

“This multiple exchange rate regime encourages capital flight and deters investment, which has further worsened Nigeria’s forex situation,” he said.

On July 1, 2015 the Central Bank of Nigeria (CBN) restricted the availability of foreign exchange to the importation of 41 items, which could be competitively produced within the economy.

In December 2018, the bank included fertiliser on the list of 41 items classified as ‘not valid for foreign exchange in the Nigerian forex market, and other items subsequently.

Naira on Thursday strengthened by 0.20 percent as liquidity improved at the Investors and Exporters (I&E), Nigeria’s official foreign exchange market.

After trading on Thursday, the dollar was quoted at N436.63/$ as against N437.50 quoted on the previous day, data from the FMDQ indicated.

Most traders who participated at the foreign exchange auction on Wednesday maintained a bid at N442 (high) and N434.61 (low).

Read also: Layer3Cloud taps cloud tech to tackle forex issues in Nigeria

Liquidity improved slightly as the daily foreign exchange market turnover increased by 43.05 percent to $100.74 million on Thursday from $70.42 million recorded on Wednesday, data from the FMDQ indicated.

At the parallel market popularly called black market, the local currency closed unchanged at N735 per dollar as demand slows.

The Overnight (O/N) rate at the money market remained unchanged at 16.75 percent, and the Open Repo (OPR) rate remained unchanged at 16.25 percent.

The Nigerian treasury bills (NT-Bills) secondary market closed on a flat note on Thursday with the average yield across the curve closing flat at 7.13 percent.

A report from the FSDH research stated that average yields across short-term, medium-term, and long-term maturities closed flat at 5.82 percent, 6.82 percent, and 8.02 percent, respectively.

In the Open Market Operation (OMO) bills secondary market, the average yield across the curve closed flat on Thursday at 10.96 percent. Average yields across medium-term and long-term maturities remained unchanged at 10.90 percent and 11.09 percent, respectively.

According to the report, the Federal Government of Nigeria (FGN) bonds secondary market closed on a flat note on Thursday, as the average bond yield across the curve closed flat at 13.99 percent. Average yield across the short tenor of the curve declined by 5 bps, while the average yield across the medium tenor of the curve increased by 4 bps. However, the average yield across the long tenor of the curve remained unchanged.

The 14-MAR-2024 maturity bond was the best performer with a decrease in the yield of 10 bps, while the 23-FEB-2028 maturity bond was the worst performer with an increase in the yield of 15 bps. Moreover, the secondary bond market is likely to remain subdued in the short term.