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Flexible exchange rate: Operators disagree on early release of guidelines

Nigeria's capital market

Nigeria’s capital market

Some capital market operators on Monday disagreed on early release of the guidelines for the flexible exchange rate proposed by the CBN on May 24.

The capital market growth would increase if the guidelines were released now while others said it would be counter-productive.

Mallam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd, Lagos said that the capital growth would remain indifferent with the non-release of the guidelines now.

NAN reports that the CBN, at the end of its Monetary Policy Committee (MPC) meeting, said the guidelines would be released at a later date.

Kurfi explained that foreign investors had developed “wait and see attitude” towards the capital market due to the delay of the guidelines.

He said that the growth recorded by the market last week was in anticipation that the guidelines would be release this week.

“We expect the modalities to be released this week but if not, the market performance will be indifferent,” Kurfi added.

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Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., Lagos told NAN that the apex bank needed to hasten the process to reduce the uncertainties in the forex market.

Omordion stated that the flexible exchange rate policy if implemented would increase foreign investors’ participation in the Nigerian stock market.

He added that the delay was not good for the economy because it had affected investment decision.

But Alhaji Rasheed Yusuf, the immediate past president, Association of Stockbroking Houses of Nigeria (ASHON), disagreed.

Yusuf said that the CBN needed to be careful to avoid further depreciation of the nation’s foreign reserve.

Yusuf explained that the apex bank needed strong foreign reserve to support a flexible foreign exchange policy.

“We don’t have enough foreign reserves and we should be careful opening ourselves to competition,” he said.

“The challenges at the foreign exchange market will worsen once the naira is allowed to float.

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“There is no one solution to the challenges we have at the moment, people should change their orientation and go into agriculture,” he added.

He also said that the unrest in the Niger-Delta should be addressed head on to boost investors’ confidence and as well increase the country’s crude oil production.

NAN reports that a turnover of 1.26 billion shares worth N11.58 billion were exchanged by investors in 17,434 deals last week.

This is against the 2.34 billion shares valued at N14.79 billion exchanged in 24,942 deals in the corresponding week.

The Financial Services Industry led the week’s activity chart with 1.02 billion shares worth N5.98 billion traded in 10,686 deals.

The Consumer Goods sector followed with 83.24 million shares valued at N3.59 billion in 2,650 deals.

The third place was occupied by the Conglomerates industry with a turnover of 74.98 million shares worth N121.59 million in 715 deals.

The NSE All-Share Index in the week under review lost 1,267.83 points or 4.39 per cent to close at 27,634.42 compared with 28,902.25 posted in the preceding week.

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Also, the market capitalisation, which opened at N9.491 trillion, shed N435 billion or 4.39 per cent to close at N9.491 trillion due to price losses.

Oando topped the losers’ chart in percentage terms by 17.87 per cent or N1.34 to close at N6.16 per share.

Neimeth Pharmaceutical trailed with a loss of 15.05 per cent or 14k to close at 79k and AxaMansard Insurance shed 13.79 per cent or 32k to close at N2 per share.

On the other hand, Cadbury led the gainers’ table in percentage terms by 21.66 per cent or N3.65 to close at N20.50 per share.

E-tranzact followed with a gain of 17.37 per cent or 87k to close at N5.88, while Trans Nation Wide Express gained 13.82 per cent or 21k to close at N1.73 per share.

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