FPI: Capital market operators task CBN on stable exchange rate


Some capital market operators on Tuesday urged the Central Bank of Nigeria (CBN) to ensure stable exchange rate to boost Foreign Portfolio Investments (FPIs) into the Nigerian capital market.

They made the call in separate interviews with the News Agency of Nigeria (NAN) in Lagos.

The operators were reacting to the persistent decline in total transactions by foreign portfolio investors at the Nigeria Stock Exchange (NSE).

Malam Garba Kurfi, the Managing Director, APT Securities and Funds Limited, said the apex bank needed to ensure stable foreign exchange and friendly economic policies to boost Foreign Direct Investment (FDIs).

Kurfi said foreign investors were more concerned at country’s foreign exchange risks rather than capital gain or price appreciation.

“The Central Bank of Nigeria (CBN) needs to ensure  stability of the exchange rate and  encourage forward contract option for those who want to hedge against exchange risks,’’ he said.

Kurfi noted that it would be difficult to boost FDIs with the price of crude oil going below the 2019 budget benchmark.

He said the country needed strong foreign reserves to attract FDIs, noting that diversification of the nation’s revenue was very paramount.

Mr Sola Oni, a Chartered Stockbroker and Chief Executive Officer, Sofunix Investment and Communications, said Nigeria would be an attractive investment destination for FPI in an enabling environment.

“FPIs do country risk analysis before they invest their hot money anywhere.

“They are also ready to move out their investment at the click of a button.

“They want an environment where there is stability in all spheres of human endeavours,’’ Oni said.

He noted that foreign investors needed macroeconomic, political, religious and social stability to invest in any country.

NAN reports that total transactions by FPIs in the nation’s bourse dropped by 36.53 per cent in seven months, with foreign portfolio outflows outpacing inflows.

Foreign and domestic portfolio transactions in the past seven months obtained from the exchange showed that total foreign transactions dropped to N530.57 billion by July as against N835. 89 billion achieved in the corresponding period of 2018.

Also, foreign inflows decreased by 39.24 per cent to N24.3.35 billion by July against a drop to N157. 13 billion posted in the comparative period of 2018.

Similarly, foreign outflows dropped to N287. 22 billion compared with N435. 41 billion recorded in 2018.