The World Bank has blamed Nigeria’s enduring foreign exchange instability on the fixed exchange regime in the official Forex market.
In a publication on African economies titled: ‘Africa’s Pulse,’ the World Bank singled out Nigeria and Angola as two countries that had yet to experience stability in the Forex market despite rebound in the prices of commodities being exported.
The report stated, “The rebound in commodity prices and improved growth prospects in some countries have helped stabilize commodity exporters’ currencies.
“However, with the Nigerian naira and Angolan Kwanzaa remaining fixed against the US dollar, the imbalance in the foreign exchange market remains substantial in both countries.”
The report also mentioned Nigeria as one of the countries in the region where there were substantial risks in the banking sector due to a number of factors, including non-performing loans and policy uncertainties.
The World Bank said, “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.”
On inflation, the report stated that although inflation remained very high in the region, it had started to ease but singled out Nigeria and Angola as two countries where inflation was rising as a result of depreciation of currencies in the parallel exchange market.
SOURCE: http://punchng.com/wbank-blames-nigerias-forex-crisis-on-fixed-exchange-regime/
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