LCCI cautions CBN on new Forex policy …Demands clarification on special window transaction

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(Last Updated On: 2016-05-31)

By Abolaji Adebayo

The Lagos Chamber of Commerce and Industry, LCCI, has cautioned the Central Bank of Nigeria, CBN, against possible abuse and distortions that its new Forex policy could create as it demanded clarification on what the CBN described as a special window for critical transactions for which preferential rates would apply.

In a statement signed by the Director General of the Chamber, Muda Yususf yesterday, the OPS umbrella urged the apex bank to be considerate in its new policy to accommodate transparency in the FOREX market to guarantees level playing fields for all investors.

However, the Chamber commended the decision of the Bank to adopt a flexible exchange rate regime. It believed that this policy choice would be a great advantage for the economic growth of the country:

It stated that the police would improve the efficiency of foreign exchange allocation in the economy, while reducing in the distortions that currently characterize the forex market and bring the economy closer to equilibrium.

According to the statement, it would also improve liquidity in the foreign exchange market as well as reduce the current trade arrears.

It further noticed that the revised policy stands to bring about reduction in the arrears of remittances which has accumulated for the past 18 months.

It added that it would also reduce uncertainty, which investors have been grappling with over the last one year, and also boost investors’ confidence and attract greater FOREX inflows to the economy.

“We also welcome the decision of the CBN to refrain from further tightening of monetary policy at this time. The current context is that the economy has been declining. The Gross Domestic Product (GDP) has contracted for the first time in twelve years; unemployment is on the rise; manufacturing capacity utilization has been weakening; and investors’ confidence has been at its lowest ebb.  The decision not to tighten monetary policy is therefore appropriate.”

Meanwhile, the OPS further urged the CBN to revisit the list of items that have been placed on exclusion list of the FOREX market.

It stated that many critical inputs of manufacturing companies were on the list and this has crippled the operations of such companies creating significant job and output losses.

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