The Chartered Institute of Stockbrokers has raised concerns about the impact on companies with a major foreign exchange component, which are posting losses or substantial decreases in profits as a result of recently implemented market reform.
This was disclosed in a statement by the CIS President and Chairman of the Council, Mr. Oluropo Dada, at the 2024 Vanguard Economic Discourse, themed ‘Reforms in an Era of Global Uncertainties: Whither Nigeria’, according to Nairametrics.
Dada, represented by Council Member Mr. Adeyemi Aina pointed out that the challenges facing businesses like Nestle and MTN, which have been hit hard by foreign exchange reforms, are also of concern to them.
He stressed that the government should be particularly sensitive to the concerns raised concerns.
“While these reforms are aimed at accelerating economic growth, they come with initial challenges due to the existing deterioration in the economic structures,” he said.
Dada reaffirmed its support for the federal government’s policy direction but suggested that there is a need to improve implementation.
He emhpasised that no country has a completely free-floating currency system; rather, advanced economies use managed float systems to protect their national currencies against market volatility.
“No country operates with a completely free-floating currency. Democratic nations typically employ a managed currency management system to prevent economic instability.
“The reality is that it is suicidal for any country to expose its natural currency entirely to the forces of demand and supply,” he stated.
He expressed concern over the impact of foreign exchange losses on the profitability of quoted companies and urged for proactive measures to mitigate these effects.
The President highlighted the importance of significantly increasing the overall volume and rate of production in the economy as a sustainable method to strengthen the national currency, the naira.
He called on the government and all economic stakeholders to work towards achieving a significant increase in local production.
