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Economist seeks intervention to stem volatility in forex market




An Economist, Dr Muda Yusuf, has charged the monetary authorities to provide a sustainable intervention framework, to ensure the moderation of current volatility in the foreign exchange market.

Yusuf, also founder, Centre for the Promotion of Private Enterprises (CPPE), said this via a statement in Lagos.

He noted that while the volatility in the foreign exchange market was naturally unsettling, it was not unexpected given the long period of distortions in the foreign exchange market.

According to him, correcting the entrenched distortions will take some time.

Yusuf, noting the foreign exchange supply limitations, stated that the system needed to be managed in way that would not undermine investors’ confidence.

He said erosion of confidence triggered speculation and influences expectations which in turn triggered diverse responses among economic players.

He, however, stated that the President Bola Tinubu’s administration was on the right path and that the current volatility in the foreign exchange market were challenges typically inherent in a major policy transition.

“The foreign exchange market is evidently under pressure as a result of a number of factors such as surge in monetary expansion in the last one month as money supply grew by an unprecedented 15 per cent in one month between May and June 2023.

“Obviously, this must have had an effect on the exchange rate and the monetary authorities should investigate this drastic growth in money supply and take steps to curb subsequent expansion.

“Over the last few years, there had been a cumulative backlog of unmet foreign exchange demand, running into billions of dollars as a result of acute illiquidity in the foreign exchange market.

“With a more liberalised foreign exchange market, the pressure of the backlog of unmet demands and other maturing forex related obligations have been unleashed on the investors and exporters window,” he said.

Yusuf also emphasised the need for vigilance to prevent questionable capital outflows or speculative assault on the currency.

He stressed that a free market was not synonymous with complete absence of regulation, saying free enterprise has to be complemented with an appropriate regulatory framework to curb illicit financial flows.

He noted that the frequency and scope of the Central Bank of Nigeria (CBN) intervention in the foreign exchange market had decelerated compared to first five months of the year.

“Recent reports from the CBN indicate a total of $17 billion intervention by the CBN in the forex market in 2022; an average of N1.4 billion per month.

“Since the inception of the present administration, it is doubtful whether we had seen an intervention of up to $1 billion in total, so it is expected that as the scale of intervention improves, the volatile will be subdued.

“Recently, government paid $500 million to settle matured debt service obligation on Eurobond and this could also be a constraining supply side factor.

“The marginal decline in foreign reserves was also amplified by the media and this also created some anxiety which could also have driven speculative activities in the foreign exchange market.

“In a couple of months, we expect the instability to subside,” he said.

Yusuf, projected that on the supply side, the trajectory is that there would be an improvement in oil output which would boost foreign exchange earnings.

He added that the prospects of improved domestic refining of petroleum products in the coming months will reduce foreign exchange demand pressure from importation of petroleum products.

“Improved investors confidence will boost Foreign Direct Investment (FDI), foreign portfolio investments, and other remittances.

“CBN should exercise better oversight on foreign exchange demands to ensure protection of the market from speculative assault and illicit capital outflows,” he said.


Steel manufacturers hail Tinubu over $14bn deal



Kamoru Yusuf

The Basic Metal, Iron and Steel Products Manufacturer, a sectoral arm of the Manufacturer Association of Nigeria, (MAN) has commended President Ahmed Bola Tinubu for his overwhelming performances and efforts towards the nation’s economic growth at the just concluded Nigeria-India economic roundtable meeting in India.

The group also commended the president for attracting the sum of $14 billion investment to boost the nation’s economy adding that the feats recorded by the Bola Tinubu-led government within 100 days of its inauguration will no doubt accelerate economic recovery and business growth in the steel sector.

This is contained in a statement issued on Sunday by the Chairman of the group, Dr. Kamoru Yusuf MON, stressing that, “Iron and Steel sector, if given the required attention and necessary support, is capable of ensuring accelerated growth of the nation’s economy.

Dr. Yusuf, who is also the Group Managing Director of KAM Holding Limited, a wholly owned indigenous Iron and Steel Industry in Nigeria added that, “President Tinubu has by all standards demonstrated his love and readiness to support industrialists. We, in the Iron and Steel sector of the Manufacturers Association of Nigeria, (MAN) are ready to support his administration with data, workable templates and roadmaps that will support Mr. President in his endeavour to succeed in his mandates to Nigerian citizens.

“As major stakeholders in Nigeria’s Project, we received this news with huge excitement and sense of fulfillment and hope that the breakthrough will further change the game of operations as ‘Risk Takers’ in the nation’s business environment. We pledge our unalloyed support to your administration towards ensuring and providing enabling atmospheres for industrialists to continue to thrive.”

The statement also emphasised that, “President Tinubu’s exceptional efforts in attracting such a substantial investment for Nigeria’s steel sector deserves standing ovation and applause.”

The group therefore promised to continue to support the Minister for Steel Development, Alhaji Shuaibu Audu, in the discharge of his duties at all times.




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Ex-CBN director urges FG to reduce cost of governance



Dr Titus Okunrounmu, Former Director of CBN

Dr Titus Okunrounmu, former Director, Budgetary Department at the Central Bank of Nigeria (CBN), has advised the Federal Government to reduce the cost of governance in order to stem the country’s debt profile.

Okunrounmu, who gave the advice while speaking with the News Agency of Nigeria (NAN) on Thursday in Ota, Ogun, described the list of ministerial portfolio on Wednesday as over bloated for a country with huge debt profile.

According to him, funding the nation’s recurrent budget with borrowing does not need these large number of ministers and bloated special assistants, which inevitably must allow for allowances and official vehicles.

“These excess baggage was not projected for in the 2023 Federal Budget and the revenue estimates could not cover the recurrent budget.

“In addition, the federal government needs financial discipline to curb corruption in the Ministries, Departments and Agencies (MDAs) to reduce debt profile in the country,” he said.

Okunrounmu advised the federal government to redouble its efforts and work against policy somersault to encourage influx of foreign investors into the country.

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