Lagos Chamber of Commerce and Industry (LCCI) has warned about the falling of global oil prices as it stands as a risk in the foreign exchange market and may also be a menace to the current deliberations about the new minimum wage.
This warning was given in Lagos on Monday by the Director-General of LCC, Mr. Muda Yusuf.
Reports coming from the News Agency of Nigeria (NAN) revealed that as at November 29, 2018, information gotten from the database of the Organisation of Petroleum Exporting Countries (OPEC) shows that oil prices are going down from $88 per barrel it was in the previous month of October to $59.96 per barrel.
This price is lower than the 2019 to 2021 benchmark of $60 per barrel set by the Medium-Term Expenditure Framework (MTEF).
Mr. Yusuf stated that this already is a risk to the economic projections for 2019 fiscal year as planned by the Federal Government of Nigeria and if nothing is done and the price keeps falling, it may negatively influence its MTEF.
He also said that the falling prices has already started affecting the foreign exchange market as the Naira exchange rate to the dollar is now $370 per dollar which is in contrast with the $363 per dollar it was being exchange in most part of 2018.
“There are worries that the recent fall in oil prices if not dealt with could bring about shortage of the US dollars.
“As capital flow reversals gets more intense, as oil price reduces and as foreign reserves are placed under pressure, there are fears that the ability of the Central Bank of Nigeria (CBN) to maintain the present state of intervention in the foreign exchange market will be put to rest”.
He also complained about reserves which is currently standing at 42 billion dollars, reducing in price from the 48 billion dollars it stood about five months ago.
While making further statements, he disclosed that the improvements in liquidity and relative stability noticed in the foreign exchange market in 2018 may also be at risk due to the falling oil prices. Also, that will impact greatly on the prices of goods and services being imported into the country and may likely lead to and increase in the current inflation rate.
The LCC Director-General stressed that vital reformation policies needs to be implemented in order to tackle the current economic state as it will help in sustaining and making the macroeconomic environment stable.