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Nigerian BDCs want autonomous Fx window
Analysts say adjusting the naira closer to its fair market value can help attract foreign inflows. Also, the Association of Bureau De Change Operators of Nigeria is urging the Central Bank of Nigeria to create an Autonomous Foreign Exchange Trading window for BDC operators. Dipo Ajayi, the Head of Fixed Income and FX at Chapel Hill Denham, joins CNBC Africa for more.
Mon, 16 May 2022 14:54:27 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Unexpected decrease in inflation figures prompts speculation about MPC decisions
- Bureau De Change operators advocate for a revaluation of the naira to align with fair market value
- Proposal for an Autonomous FX window highlights the desire for a market-driven approach in foreign exchange trading
The recent call by the Association of Bureau De Change Operators of Nigeria for the Central Bank of Nigeria to establish an Autonomous Foreign Exchange Trading window has sparked discussions among analysts and market players. The move comes amidst concerns over inflation figures and calls for the naira to be adjusted closer to its fair market value in order to attract foreign investments. Dipo Ajayi, the Head of Fixed Income and FX at Chapel Hill Denham, shared his insights on these developments in a recent interview with CNBC Africa.
Inflation figures released recently have raised some eyebrows in the market. While there were expectations of an upward movement, the actual numbers showed a slight decrease from the previous month. This unexpected development has prompted discussions about the upcoming Monetary Policy Committee (MPC) meeting and the potential impact on market decisions. Ajayi indicated that the market is closely watching to see if the MPC will align with global trends or take a different approach in light of the inflation data.
The focus has also shifted to the Bureau De Change operators and their push for a revaluation of the naira. These operators believe that aligning the naira closer to its true market value would alleviate the pressure on the currency and create a more stable exchange rate environment. By advocating for an Autonomous FX window, they are urging the CBN to consider a more flexible approach to managing foreign exchange transactions. Ajayi pointed out that opening up a transparent FX market could lead to a higher valuation of the naira, contrary to the current rates set by the BDC operators.
The debate surrounding the naira's valuation highlights the complexities of the foreign exchange market in Nigeria. As the country aims to attract foreign inflows and enhance liquidity in the currency market, finding the right balance between market forces and regulatory interventions remains a key challenge. The BDC operators' proposal for an Autonomous FX window reflects their desire for a more market-driven approach to foreign exchange trading.
Overall, the discussions around inflation, MPC decisions, and currency valuation underscore the interconnected nature of economic factors in Nigeria. As stakeholders continue to navigate these dynamics, the call for a reevaluation of exchange rate mechanisms and the establishment of an Autonomous FX window are likely to remain key points of focus in the coming months.
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