‘Why forex market is under immense pressure’

‘Why forex market is under immense pressure’

The collapse of oil price, oil price war, COVID-19 pandemic and the global lockdown have been identified as reasons why Nigeria’s foreign exchange market has been under immense pressure. However, industry experts believe that steps taken so far by the Federal Government and the Central Bank of Nigeria (CBN) to support the economy will bring back forex liquidity.

Speaking at its Virtual Corporate Customers forum webinar in Lagos, with the theme: Navigating the Financial Impact of COVID-19 – Business Leaders’ Role in Finding a ‘New Normal’, Group Executive, Treasury and Financial Institutions, First Bank of Nigeria Limited, Mr Ini Ebong, explained that the forex market was under pressure due to the exit of portfolio investors, Daily Times monitored.

He said that demand for dollars was heightened due to the collapse of oil price and the Coronavirus pandemic.

“If we create a good, conducive environment, portfolio managers will still come back to our market,” he said.

But the Chief Executive Officer of the bank, Dr Adesola Adeduntan, who spoke earlier on the topic, “Impact of the COVID-19 Crisis on the Nigeria Financial Sector”, assured Nigerian bank customers that FirstBank will optimally maximise the opportunities from the disruptions occasioned by the Coronavirus (COVID-19) pandemic on the economy to their advantage.

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Adeduntan said that the bank would continue to leverage the changes to reduce the cost of doing business. “COVID-19 is giving business leaders an opportunity to rethink on established wisdom. It is a major crisis that we need to deal with and we must change it from a bad to a good crisis. It offers an opportunity to reinvent our business. We have to think without the box,” Adeduntan said.

According to him, the bank is looking at several opportunities to do things differently to achieve the desired result. The First Bank CEO said the pandemic had put significant pressure on revenue and profits of commercial banks. He noted that the banking industry was witnessing more stringent interest rates, higher foreign exchange funding cost and concerns on the level of foreign reserves, among others.

The bank chief said that the pandemic had led to an uptick in the level of non-performing assets and an increase in the level of cyber attacks due to migration to digital channel Adeduntan assured customers that the bank would overcome the pandemic, having been in existence for the past 126 years. He said that First Bank was already in existence when the first pandemic of 1918 occurred.

“It weathered it and would still shake off COVID-19 pandemic. Our customers are right in there at the centre of our business,” Adeduntan said. He said that the bank had unveiled enhanced palliative measures to help its customers and Nigerians through the times of COVID-19 lockdown. Also, a tax expert and Partner, KPMG, Mr Wole Obayomi said the tax was part of life while noting that no country had cancelled tax payment because of COVID-19.

Speaking on the topic, “Tax Advisory: Market Disruptions,” Obayomi advised corporate organisations to ensure payment of tax as and when due, to reduce tax bills in the form of penalties.

He said they could engage tax authorities for payment extension if they foresee late payment due to the global pandemic.

Obayomi, however, called on the Federal Government to suspend the new Value Added Tax (VAT) increase to 7.5 per cent till 2021 due to COVID-19 pandemic.

By Temitope Adebayo

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