Forex Crisis: ‎Solve Fixed Exchange Regime World Bank

By Ikenga Chronicles May 2, 2017

Forex Crisis: ‎Solve Fixed Exchange Regime World Bank

As Nigeria battles to ensure still in the forex market, the World Bank has identified fixed exchange regime in the official market as reason for persistent instability.

Nigeria ’ s enduring foreign exchange instability on the fixed exchange regime in the official forex market .

Nigeria along side Angola were pointed to as countries who are yet to regain stability despite rebound in the prices of commodities being exported, a publication on African economies “Africa’s Pulse’ disclosed.

“ The rebound in commodity prices and improved growth prospects in some countries have helped stabilise commodity exporters ’ currencies .

“ However, with the Nigerian naira and Angolan kwanza remaining fixed against the US dollar , the imbalance in the foreign exchange market remains substantial in both countries . ”‎ the report reads.

Substantial risks in the banking sector due to a number of factors , including non – performing loans and policy uncertainties was also cited as reason for forex market instability.

“ Banking sector vulnerabilities remain elevated in the region , including in Angola , CEMAC countries , the Democratic Republic of Congo and Nigeria . Foreign exchange restrictions, policy uncertainty and weak growth have affected the soundness of the banking sector .

“ Non – performing loans have increased , and profitability and capital buffers have decreased . Several proactive measures have been introduced to contain risks to financial stability , including through increased provisioning and by intensifying monitoring and supervision of banks . ”‎ it said

The report added , “ Inflation in the region is gradually decelerating from its high level in 2016 but remains elevated . Although a process of disinflation has started in Angola and Nigeria , inflation in both countries remains high , driven by a highly depreciated parallel market rate .

“ Inflation eased in metals exporters , because of greater currency stability and lower food prices due to improved weather conditions . ”