With the commencement of trading under the new foreign exchange guidelines on Monday, the Group Chief Executive Officer, Ecobank Transnational Incorporated, Mr. Ade Ayeyemi, has said there will be short-term pain and a need for adjustments.
Ayeyemi, who stated this in an exclusive interview with our correspondent, commended the decision by the Central Bank of Nigeria to liberalise the forex market.
The CBN had last week said based on the new guidelines, the value of the naira against other currencies would be market-driven, putting an end to its peg of N197-N199 to the United States dollar.
Ayeyemi said, “The crisis we have in the economy was very concerning. The response that has happened now by the central bank and the government to completely liberalise the forex sector is very good.
“While we know that there will be short-term pain as a result of those changes, we think in the longer term, it allows liquidity to come back to the economy in terms of foreign currency liquidity. It allows appropriate pricing of goods and services. It removes rent-seeking activities. It allows the economy to grow.”
The ETI Group CEO noted that before the introduction of the forex guidelines, major airlines had started saying they were cancelling their flights to Nigeria.
He said, “We have been kicked out of major indices. Our stock market has gone down to about N9tn. Those are material things. We align with the move that has been made recently with the forex regime. We know that it is going to be volatile in the short run, but it is something that we have to go through, and I encourage the government and Nigerians to stay the course.
“The banking sector will adjust, we believe. The rest of the economy will need to adjust. But we think ultimately, it is a very good move for the country.”
Ayeyemi said the naira may come under pressure in the coming days amid accumulated backlog of forex demand.
“In the short term, whoever wants to supply the (interbank) market will say, ‘Let’s wait and see whether they are going to stay the course; whether there is going to be liquidity in that market.’
“What happens in the short term is that the rate may over-shoot to N300 or higher. But as those demands get met, then suppliers will come into the economy. And as those suppliers come, then the rate will now stabilise.”
source:read more @ www.punchng.com/new-forex-policyll-bring-short-term-pain-says-ecobank/
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