Available economic indicators have shown that the recently introduced investors and exporters foreign exchange window is expected to have a positive medium to long -term impact on the foreign exchange market.
According to the Cowry Asset Management Market Review for H1 2017, and the outlook for H2, this will be made possible because the market is expected to deepen further as authorised dealers encourage their corporate clients to on-board the FMDQ and advise foreign exchange trading system, in order to fast-track the migration of the activities of investors and exporters of foreign exchange window into the foreign exchange trading system, and thereby enhance market transparency and efficiency.
Relatively, an H2 2017 CBN business expectations survey also showed that business owners were more optimistic about conditions in the last quarter at 47.5 points, compared to previous quarters which stood at about 28.2 point. Insufficient power supply was cited as the biggest constraint to businesses, followed by access to finance and high interest rate
The survey noted that most businesses expected the naira to appreciate in the next quarter –on the back of a recent policy intervention in the foreign exchange market; while inflation rate and borrowing rates were expected to decline in the next quarter.
It added that the global economic activities continued to wax strong in the H1 amid sustained expansion in both manufacturing and services sectors.
“The boost in the global economy, which was driven by developed economies, was partly attributed to a number of factors such as relatively low crude oil prices which was particularly beneficial to advanced economies, accommodative monetary policy stance in developed economies, and improvement in business and consumer sentiments.
“However, commodities-dependent economies were negatively impacted by relatively weak prices which led to weakened balance of payment positions and increased cost-push inflation, amongst other things,” the report said.