Lagos - The Chartered Institute of Stockbrokers (CIS) on Sunday said that the new foreign exchange policy announced by the Central Bank of Nigeria (CBN) would bolster investor confidence in the Nigerian Stock Exchange (NSE).
This is contained in a statement issued by Oluwaseyi Abe, CIS President and Chairman of the Council, and made available in Lagos.
Abe stated that the new foreign exchange policy would also trigger in-flow of foreign portfolio investments and boost the velocity of the stock market.
He explained that foreign in-flows into the capital market dropped by 32 per cent in 2015, while the benchmark equity index fall by 17 per cent this year.
Abe commended the apex bank for the re-introduction and re-modelling of the floating single foreign exchange policy.
"It is a bold and positive initiative which attests to the dynamism of the apex bank in policy evolution for the greater benefit of the economy.
"The operating dynamics of the new framework as stipulated by CBN is in accordance with the tenets of democratic capitalism of which the highlights are, market-driven systems, free participation within individual limitations and the invisible hand," he said.
Abe added that the policy would hedge volatility in the foreign exchange market noting that the licensing of foreign exchange primary dealers were well commended innovations that would deepen the market.
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"Barring systemic malfunction, CIS believes that the implementation of the new framework will boost dollar supply; and with clarity, define the exact exchange rate," Abe said.
He stated further that the policy would ease the challenges of businesses across the board and return the economy to the path of growth.
According to him, the currency peg of the past 16 months resulted in a dearth of dollar currency and prompted large scale capital flight with the attendant growth challenges in the economy.
He said that the institute supported the continual restriction of the 41 excluded items from the interbank foreign exchange market.
He added that the exclusion of the items would enhance the growth of small businesses.
Godwin Emefiele, the Central Bank of Nigeria (CBN) Governor, on June 15 released modalities for the long-awaited implementation of the flexible foreign exchange policy.
Emefiele announced the introduction of a two way quote, which meant that buyers and sellers would state prices and quantities they were willing to buy and sell.
He also maintained that the 41 items banned in 2015 for access to forex for imports remained banned.
Emefiele said that the exchange rate would be market determined, adding that the CBN would also participate in the market occasionally.