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COWRY ASSET BOSS LAUDS EMEFIELE

COWRY ASSET BOSS LAUDS EMEFIELE

The  Managing Director /CEO of Cowry Asset Management Limited and member of the Nigerian Stock Exchange, Johnson Chukwu, has commended the new Central Bank Governor,  Mr.Godwin Emefiele’s   decision to focus on the real sector of the economy by driving down interest rates, saying it’s in tandem with the clamour of most Nigerians for affordable bank lending rates.
Speaking on his expectations as the new apex bank boss took charge, he also pointed out that a lower interest rate is achievable in Nigeria given that inflation rate has remained below 10 percent in the last couple of months.
“At current inflation rate of 7.9percent, banks can afford to purchase funds at a maximum of 10 percent and lend at between 12 percent and 15 percent, which I believe that most business operators can afford. While lower interest rate is achievable, it may be difficult for the Central bank to combine lower interest rate with exchange rate stability and low inflation rate in view of the current precarious foreign exchange reserve position. With a foreign reserve of about $37.3billion, the Central Bank may not have enough war chest to defend the Naira if foreign portfolio investors reverse their investment inflows into the economy as a result of the unattractive yield regime”, he said.
According to him, given that the Nigerian financial market is not fully integrated to the global financial markets as the European banking system,  the Nigerian currency would not suffer as much impact as the Euro when the CBN starts reducing interest rates.
“Nevertheless, I expect Naira to come under pressure if the Central bank drops FGN Treasury Bills rate and bond yields to below 10 percent”.

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