DID INTER BANK FOREX MARKET TRUNCATE RECOVERY?

After all the gloomy pictures painted by the cocktail of national statistics for July have been digested, it looks like the inter bank foreign exchange market introduced in June truncated gross signs of recovery.

According to the gross domestic product statistics in particular sectors like Manufacturing, trade, and energy witnessed slight increases on first quarter to March.

Also in the belly of information and communication sector, broadcasting too witnessed significant growth quarter on quarter just like Insurance in the finance and insurance sector.

It is likely that preferential allocation of forex to some of these sectors and reduced interest rates in November helped to bring this about.

Of course, one is talking of nominal product at current prices without adjustment for the July 17.1% inflation rate.

Once all the values in the composite price index basket are discounted for inflation, no sector ends up with growth year on year or quarter  on quarter.

The more reason why nominal quarter on quarter growths recorded in manufacturing, transportation; trade, electricity; nsurance and broadcasting stood the chance of being improved upon to eventually match or even surpass inflation rate given chance to consolidate.

Now it will be unrealistic to expect higher growth rates for most of them; particularly the manufacturing sector and energy when finally figures for the third quarter to September surface later in the year.

In the long run, though, inter bank forex market is best because once it can be fully established, it offers better inflow potentials than fixed exchange can ever hope to achieve.

The only problem was that the doctors were too much in a hurry to bring the patient back to health and so, ended up recommending dosage the patient can not withstand yet without support.

Now the challenge is how to come up with support incentives that could help those hit hard by the slash in Naira value to survive and hold on until things can stabilise.

If not, more and more companies will be under pressure to reach for the parachute or downsize significantly before the end of the year.

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