Forex: Expert proposes adoption of flexible exchange policy regime

An economic expert has proposed the adoption of a flexible exchange-rate policy regime to mitigate the current foreign exchange crisis. The Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf was a guest speaker at the annual workshop organised by Commerce and Industry Correspondents Association of Nigeria (CICAN), on […]

An economic expert has proposed the adoption of a flexible exchange-rate policy regime to mitigate the current foreign exchange crisis.

The Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf was a guest speaker at the annual workshop organised by Commerce and Industry Correspondents Association of Nigeria (CICAN), on the theme, ‘Impact of Forex Crisis on the Real and SME Sectors’.

According to Yusuf, the sharp depreciation of the naira exchange rate in the parallel market remains a cause for concern; saying, it is a trend that should not be allowed to continue, and that all necessary steps must be taken urgently to stem the slide and volatility.

He identified three challenges of forex on the economy as the sharp depreciation of the currency over the last one year; the liquidity crisis in the foreign exchange market, which manifests in the acute shortage of foreign exchange in the official window, and the volatility of the exchange rate which creates considerable uncertainty and unpredictability for investors.

He said the adoption of a flexible exchange rate regime would improve liquidity in the forex market, reduce uncertainty and enhance investors’ confidence.

Yusuf added that a flexible exchange rate regime would help deepen the autonomous foreign exchange market through the liberalization of inflows from Export Proceeds, Diaspora Remittances, Multinational Companies, Donor Agencies, Diplomatic missions, etc.