…Hold rate at 11.5 %
…As Foreign reserve hits $36. 5 b
…MPC worries over insecurity in food producing areas
Emma Ujah, Abuja Bureau Chief
The Central Bank of Nigeria (CBN) has assured members of the public that there was enough foreign exchange for them to meet their obligations.
The Governor of the bank, Mr. Godwin Emefiele, gave the assurance at the end of yesterday’s Monetary Policy Committee meeting, in Abuja, where it held the Monetary Policy Rate at 11.5 per cent and retained all other parameters by maintaining the Asymmetric Corridor of +100/-700 basis points around the MPR; Cash Reserve Ratio (CRR) at 27.5 per cent; and the Liquidity Ratio at 30 per cent.
He was responding to concerns that some customers complained of scarcity of forex at the banks and that they could not pay their children’s school fees, abroad.
Mr. Emefiele disclosed that the nation’s foreign reserve stood at $36. 5 billion as at the end of last month, representing a rise from its $34. 5 billion position in the preceding month.
He said, “There is enough foreign exchange for people to meet their obligations . If you have forex obligations, they will be met. There is no need to panic or for everyone to rush to the bank at the same time and create an atmosphere of panic and give some people the opportunity to rip-off innocent people.
“CBN disburses not less than $80 million to banks weekly. In fact we will create a help-desk where people can call the CBN directly to complain if you need forex to pay school fees or BTA and say, ‘I went to such and such a bank and was told there if no forex.’”
Mr. Emefiele also explained that the nation has not changed its foreign exchange management policy, as the apex bank has continued to adopt the managed-floating strategy.
His words, “Nigeria has not changed it foreign exchange policy. CBN, as the organisation that has the core mandate to manage the foreign exchange, has continued to watch the market and intervenes in the market, depending on its readings of the market.
“It might interest you to know that CBN has not intervened in the E&I (Export and Import) Window since January. The exchange rate has moved at a point to N409 /$1, N412/$1 and even N4013/$1. That is how it should be.”
Insecurity increasing food prices
According the CBN boss, the MPC was concerned that persons and groups were causing insecurity in the food producing areas of the nation, leading to unprecedented rise in food prices, across the country, with a call for urgent actions to halt the ugly situation, which has serious consequences for food security in the country.
“MPC reiterates its concerns about persons and groups causing security challenges in the food producing areas of the country as this has contributed to food prices across the land.
“The committee therefore called for a coordinated and collaborated efforts by all relevant agencies and stakeholders towards addressing the security issues and challenges,” the CBN boss said.
Why rate was retained
With an inflation rate of 17. 33 per cent and a desire to stimulate growth in an economy that has just exited recession, Mr. Emefiele admitted that the MPC faced a dilemma at yesterday’ meeting.
He however, disclosed that after exhaustive deliberations on whether to cut, hold or raise the MPR, the majority of the members chose to hold the rate with all its parameters.
According to him, “We were faced with contradictions. Tight monetary policy makes credit difficult and so people will not be able to easily access capital to stimulate output growth. As rising inflation confronts you, you want to take steps to reduce the rate of inflation. But if you do, then growth is affected.
“The country just managed to crawl out of recession. Should monetary policy be tightened in a way that will be a disincentive to activities that will stimulate output growth and therefore reverse us back into recession or should we continue to stimulate the economic growth?