Chief Executive Officer, Financial Derivative Company Ltd, Bismarck Rewane has said that higher interest rate would have impact on the nation’s economy leading to reversal in capital inflow and increase in cost of debt services.
Rewane who made this statement in Lagos at the LBS breakfast session said that higher rate will put pressure on the naira and also lead to bearish sentiment in the stock market.
Rewane who spoke in its presentation tagged “Nigeria Is it Light Out or Game On” said that with higher interest rate cost of domestic borrowing would increase, there will be possible slow down in economic activities, adding that imported inflation is likely to rise as currency pressure persist.
Highlighting the impact of higher interest rate on business in the country, he said, cost of import will rise reducing corporate margins, while dollar scarcity will increase forex demand pressure at the parallel market.
He said possible increase in domestic interest rates will push up cost of funds while fixed income investors will benefit from higher interest rate but could weigh on stock market performance.
Rewane further said that delisting Nigeria by JP Morgan implies a loss of confidence in the economy and would increase cost of borrowing in the international capital market.