In a personal note to the committee released by the apex bank, Adenikinju, who is also Research Professor at the Centre for Econometrics and Allied Research, University of Ibadan, described exchange rate management as challenging due to shortage of foreign exchange in the economy.
He said: “The exchange rate management will continue to be challenging as the deficits in trade account and current account during slowdown in remittances and Foreign Portfolio Investment (FPI) persist. Hence, the CBN must creatively adjust the exchange rate at minimum costs to the economy”.
He further called for continuous dialogue between CBN and key stakeholders in the economy like non-oil exporters, to ensure synergy between the apex bank policies and programmes and the incidence of their implementation.
Despite global oil prices soaring past the $64 per barrel threshold, Nigeria’s external reserves stood at $36.5 billion as at February 22, 2021, CBN data showed.
Forex Trading Associate, AZA- a global foreign exchange dealer, Oghenefejiro Eduviere, who disclosed this in a note to local and foreign investors, said the official exchange rate across the multiple windows is crawling towards the CBN’s target.
Oghenefejiro predicts that on the I&E window, the currency could depreciate towards a new low of N440 to dollar and sees a possibility of the I&E window converging towards the parallel market rate.
Continuing, Adenikinju said that from the presentations of the CBN’s Staff, the Financial Soundness Indicators (FSI) remain strong, although there is a slight deterioration in the Capital Adequacy Ratio (CAR) and the non-performing loans (NPLs) ratio.
“The CAR declined from 15.5 per cent in October 2020 to 15.1 per cent in December 2020. Similarly, NPLs ratio rose from 5.7 in October 2020 to six per cent in December 2020. Bank Assets, Credits and Deposits continue to be strong and recorded growth”.