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Forex scarcity, repatriation uncertainties reduce investments in Q1 – Report




Investment analysts have attributed foreign exchange (forex) scarcity and repatriating funds out of the country to reduction of Foreign Portfolio Investment (FPI) in the stock market.

They explained that investors are scared of investing in climes where forex prices are managed and not market reflective.

Analysis of the figures on Foreign Portfolio Investment (FPI) participation in the equities market, showed that foreign investors contributed paltry 22.21 percent to total transactions (N676.53 billion) during the period under review.

On his part, Ali Khalpey, CEO, EFG Hermes Frontier, said that uncertainty around the exchange rate and the possibility of repatriating dollars out of the country still serve as challenges.

He said: “FPIs are not going to come in knowing that foreign Exchange (FX) prices are managed and not market reflected. it is very difficult to attract capital when you are dealing with such low yields and high inflations and then you still try to control FX pricing.

“So, there is no way we would get the level of capital that the market needs. If we see significant reforms on FX regime, significant adjustment in naira exchange rate coupled with the high oil price, then we will see a very quick turnaround in what the equities market will do.”

Also speaking about the development, Lilian Olubi, Chief Executive Officer, EFG Hermes Nigeria, said that price fixing regime in the foreign exchange (forex) market is a deterrent to Foreign Portfolio Investors (PFIs), and enjoined the authorities to reduce focus on FX management.

“There has been too much focus on managing the foreign exchange price and the effect of that action has been affecting other things including the confidence of investors coming to the market. 

 “They should allow things to run and should reduce management and focus on FX pricing, which seems to be the key and core of CBN’s activities at the detriment of other macroeconomic issues,” Olubi said.

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