Analysts at FBN Capital Limited, a subsidiary of FBN Holdings Plc, on Wednesday noted that the natin’s foreign exchange market is not fully functional because the reforms suffered undertaken have failed to unlock enough inflows to compensate for the sharp fall in oil revenue.
A statement by the company, recalled that the communiqué issued at the end of Tuesday’s meeting of the Monetary Policy Committee (MPC) said “little about the new foreign-exchange regime beyond stressing the flawed operations of the bureaux de change (BdC).”
The 10 MPC members in attendance at the meeting voted unanimously to retain the policy rate at 14.00%; Cash Reserve Requirement, 22.50% and Liquidity Ratio, 30%.
“Our call had been no change on the grounds that the MPC has practically exhausted its ammunition and would again seek support from the fiscal side. This is a particularly thin communique, which tells us that the committee is feeling almost marginalized,” the analysts added.
The committee anticipates that the MPR could be cut to 11% at the committee’s January meeting from 14%; just as inflation rate growth could slow down to 10% by December 2017, from a peak of 18.5%this year based on the CBN’s anticipated a bumper harvest season; while the Bonny light crude could sell at $60per barrel, from $53.
GDP growth is also projected at 2.0%, from 1.0% at the end of this year, just as foreign reserves would remain at $20 billion, from $34 billion at the end of 2015.
Still on the outcome of the two-day MPC meeting, the statement noted that the committee and the CBN are not holding “themselves responsible for the three successive quarters of GDP contraction, which are attributed to legacy issues as well as sabotage in the Niger Delta.”
It however however urged he Federal Government to “securitizes its arrears to contractors and other domestic creditors so as to give a boost to spending.”