CBN retains key interest rates

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…Vows to sustain forex intervention

From Uche Usim, Abuja and Chinwendu Obienyi

The Central Bank of Nigeria ( CBN) yesterday assured Nigerians that it would realise its goal of currency convergence by continually injecting foreign exchange into the foreign exchange markets to meet legitimate needs.
The CBN Governor, Godwin Emefiele, who gave the assurance yesterday in Abuja while briefing journalists on the outcome of Monetary Policy Committee (MPC) meeting, however, denied that the intervention by the bank was engineered by National Economic Council (NEC) which had earlier asked the apex bank to immediately review its forex policy.
His words: “The point is that the NEC did not direct us. The CBN made a presentation on the Nigerian economy and forex policy and the NEC, thereafter, advised that we should look into all the issues discussed, including the forex market. But, of course, before then, we had started to see the trend at the exchange rate, especially at the parallel market, and we had taken a decision that there was need to revise the trend; and that is the reason we specifically did the forex intervention and I’m  happy that those interventions have proved very positive. We have seen the rates now converging and we are strongly optimistic that the rates will converge further,” the CBN Governor said.
With regards to sustaining the tempo of injection, Emefiele said, “with the recent acreages in foreign reserves, the intervention will be sustained. We hereby warn currency speculators to be wary of plotting an already lost game. The CBN boss further stated that, “it’s important to say that reserves at this time are still trending upward, almost close to $31 billion as I speak, and the fact that we have done this consistently  for four to five weeks should tell everybody or those who doubt the strength of CBN to sustain this, to say they are taking a risk. And they will lose in this bid. They want to place a wrong bet on the direction we are going.
“The direction is that there is a determination to see to the convergence of those rates and with what we have seen so far, we are very optimistic that those rates will converge and all the elements in foreign exchange market will no doubt be implemented. That programme is on course and  is looking good beyond our expectations. Those who still remain on the sideline doubting the level of CBN’s ability to sustain the trend are on the wrong side of the bet,” Emefile said.
He revealed that the MPC members voted to hold all policy rates unchanged by retaining Monetary Policy Rates (MPR) at 14 per cent, CRR, 22.5 per cent; Liquidity ratio, 30 per cent, and in addition, retained assymetric corridor at  +200-500 around the MPR.
Meanwhile, President, Association of Bureau De Change Operators of Nigeria (ABCON) Mr. Aminu  Gbadebe, said  in Lagos yesterday that the new FX policy has eliminated frivolous demand for dollar, which was responsible for the weakness of the Naira
The ABCON chief said that CBN’s continued intervention at the forex market would soon spell doom for speculators and currency hoarders.

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