‘CBN’sClosureofForeignExchange WindowsPositivetoCapitalMarket’

An investment banking company BGL has commended the Central Bank of Nigeria (CBN)’s closure of Retail Dutch Auction system (RDAS) and Wholesale Dutch Auction System (WDAS) foreign exchange windows, saying it would bring positive changes in the capital market.

BGL gave the commendation in its report published yesterday to analyse the benefit of the apex bank’s decision to close the foreign exchange window expected to ensure the stability of the currency.

The News Agency of Nigeria (NAN) recalls that the CBN had on Wednesday closed the RDAS and WDAS foreign exchange windows to help stabilise the nation’s currency. It directed all authorised dealers and general public to channel all demand for foreign exchange to inter-bank foreign exchange market.

The apex bank further assured stakeholders that it would continue to intervene in the interbank foreign exchange market to meet genuine and legitimate demands.

“The implication of this action on the capital market is expected to be largely positive in the medium to long term. The short term implications are hazy considering the heightened political environment and its effect on economic prices.

“In the medium term, market determined exchange rate will support the evolution of the local foreign currency futures, derivatives and hedging contracts, which will support a more stable exchange rate market”, it added.

The BGL report said a stable exchange rate would support robust capital market development and growth. It said this would boost foreign investor’s confidence in the market with predictable naira exchange rate variables. It said the monetary policy effectiveness would also