The Nation Newspaper

Tag: MPC

  • Senate screens Buhari’s nominees for CBN, MPC

    THE Senate yesterday screened President Muhammadu Buhari’s two nominees for the position of Deputy Governor of the Central Bank of Nigeria (CBN).

    The nominees are Mrs. Aisha Ahmad and Mr. Edward Adamu.

    Similarly, four other nominees were also screened as members of the Monetary Policy Committee (MPC). They are Prof. Festus Adeola Adenikinju, Dr. Aliyu Rafindadi Sanusi, Dr. Robert Chikwendu Asogwa and Dr. Asheikh Maidugu.

    The nominees took turns to face the Senate Committee on Banking, Insurance and other Financial Institutions as its members threw a barrage of questions at them.

    The Senate had put on hold the screening of the nominees and others appointed by President Muhammadu Buhari for several weeks, owing to disagreement between the two arms of government.

    Mrs. Ahmad, who was accompanied to the venue of the screening by her husband and her father, was the first to be screened. In response to questions, the nominee stressed the need for the country to have a stable foreign exchange policy to stabilise the economy.

    Mrs. Ahmad advocated non-oil exports-boosting policies, saying they were crucial in diversifying nation’s sources of foreign exchange.

    “One of the key challenges that we are facing is over-reliance on oil and our sensitivity to changes in the price and availability of oil.

    “The real action we need to take concerning diversifying the economy is to diversify the sources of foreign exchange.

    “It is a simple demand and supply situation; if you have a high demand for your good and supply is not there, there is a problem.

    “Over the last 18 months we have seen a steady stabilisation of our rates.

    “What the importer and exporter window has done for us is to provide some assurance, some liquidity and some transparency in that market in terms of price.

    “The stability we have seen has also encouraged some foreign investors to come and invest.

    “While working on structural issues that are more long-term in diversifying our sources of foreign exchange, coming up with policies that stimulate domestic production and encourage exporters, we ensure we are converging on the rates.

    “So, the difference between the official rates and the rates you have in some of the other channels are to be converged,” she added.

    On his part, Edward Adamu, who is widely acknowledged to have been appointed on merit based on his track record at the apex bank, was not subjected to the grill. Members of the Senate committee were unanimous in giving him a smooth passage.

    Alleged moves by some Presidency cabal to replace Adamu with a preferred candidate were vehemently resisted by his colleagues at the CBN, who vowed to frustrate such manipulation.

    At the beginning of the exercise, the Senior Special Assistant to the President on National Assembly Matters (Senate), Ita Enang, pleaded with the lawmakers to also screen other nominees of the President, whose nomination are still pending.

    Chairman of the Senate Committee Senator Rafiu Ibrahim, however, said the Senate leadership decided to yield ground owing to the strategic and sensitive nature of the nominees’ appointments.

  • MPC meeting to hold after Senate confirmation of deputy governors – Emefiele

    The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, said on Thursday the Monetary Policy Committee (MPC) meeting would hold between seven and 10 days after the Senate confirms the list of deputy governors and MPC members submitted by President Muhammadu Buhari.

    Emefiele stated this after the inspection of the Sunti sugar factory owned by the Flour Mills of Nigeria and part funded by the CBN.

    The President submitted the list of two deputy governors and six MPC member to the Senate last year for confirmation.

    Addressing journalists after the inspection, the CBN governor said he was “delighted that Senators have decided to screen the nominees earlier sent to them by Mr. President.”

    “We will have a few days delay. MPC was supposed to hold on the 19th or 20th of March. What I suspect is that we will be holding our committee of governors meeting and we will decide. And I believe we will just have between seven and ten days delay and the MPC will hold,” he added.

    Speaking on the success of the sugar factory, Emefiele said “with the success of this sugar factory, nothing is impossible and no hurdle is insurmountable, that we could see this happen in Nigeria. Nigeria is a country endowed with a lot of resources. It is endowed with youth and intelligent people, good soil and I believe we can do it. I want to repeat the promise I have made, if any company is interested in any agricultural, agro allied and agro processing industry, we are ready to support them.”

     

     

  • LCCI urges executive, legislature to resolve issues in national interest

    LCCI urges executive, legislature to resolve issues in national interest

    The Lagos Chamber of Commerce and Industry ( LCCI ) has appealed to the executive and legislative arms of government to resolve their issues in the national interest and for economic growth.

    Mr Muda Yusuf, its Director-General, made the appeal in an interview with the Reporter in Lagos on Wednesday.

    He said that the two arms of government should ensure that their differences did not affect the economy and welfare of citizens.

    Yusuf made the suggestion while reacting to the postponement of the Monetary Policy Committee (MPC) meeting scheduled for Jan. 22 and Jan. 23 due to inability to form the statutory quorum.

    The vacuum in membership of the MPC was due to retirement of some members and some who had completed their terms.

    The Second Schedule of the CBN Act (Section 12(5) and 540) stipulated that the quorum should be formed with six members in attendance, two of whom should be the governor and a deputy governor or two deputy governors.

    Read Also: 2018 Budget: LCCI lauds 30.8% capital allocation

    Reporter recalls that President Muhammadu Buhari, in October 2017, nominated Mrs Aisha Ahmad as Deputy Governor of the Central Bank of Nigeria.

    He also sought the confirmation of Messrs Adeola Adenikinju, Aliyu Sanusi, Robert Asogwa and Mrs Asheikh Maidugu as members of the CBN Monetary Policy Committee.

    Months after the nomination, the Senate is yet to confirm the nominees.

    Yusuf said that whatever reasons the National Assembly might have to stall confirmation of the nominees should be set aside in consideration of the economy.

    The LCCI boss said that socio-economic growth should be the priority of government, adding that the country should avoid issues that might heighten uncertainties about the economy.

    “The outcome of the MPC meeting always gives direction about the thinking of the monetary authority and investors are usually on the lookout for these decisions,” he said.

    Yusuf said that this was paramount to maintain investors’ confidence, attract investments and create jobs.

    NAN

  • CBN injects $210m into Forex market

    CBN injects $210m into Forex market

    As the Monetary Policy Committee (MPC) of the Central Bank of Nigeria ( CBN ) commenced its last meeting for 2017, the bank injected has 210 million dollars into the inter-bank Foreign Exchange Market.

    The CBN Acting Director, Corporate Communications, Mr Isaac Okorafor in a statement issued on Monday in Abuja, said the interventions were in the Wholesale, Small and Medium Enterprises (SMEs) and invisibles windows.

    He said the bank offered the 100 million dollars to the wholesale segment, while the SMEs segment received the sum of 55 million dollars.

    Okorafor also said that the invisibles segment, comprising tuition fees, medical payments and Basic Travel Allowance (BTA), among others also received an allocation of 55 million dollars.

    According to him, the releases are aimed at boosting liquidity, trade and ease of remittances for legitimate personal commitments.

    He said the bank was quite pleased with the rate of N360 to a dollar, noting that the continued intervention by the CBN in the inter-bank forex market had largely checked unwholesome activities of currency speculators.

    He, however, stressed that the CBN would not relent in its monitoring of the market in order to ensure that authorised dealers abide by the extant rules.

    The News Agency of Nigeria (NAN) recalls that the CBN had in its last intervention injected 195 million dollars into the inter-bank Foreign Exchange Market.

    Meanwhile, the naira maintained its steady rate against major currencies around the globe, exchanging for N360 to a dollar, N420 to the Euro and N470 to Pounds Sterling in the Bureau De Change segment of the market.

    Read Also: Forex: CBN boosts liquidity with $195m

  • Forex: CBN opens week with $195m ahead of MPC decisions

    Forex: CBN opens week with $195m ahead of MPC decisions

    The Central Bank of Nigeria (CBN) on Monday boosted the Foreign Exchange (Forex) market by offering a 195 million dollars in three segments of the Forex market.

    The acting Director of Corporate Communications, Mr Isaac Okorafor, in a statement, said it auctioned 100 million dollars at the wholesale Secondary Market Intervention Sales (SMIS) window of the inter-bank Foreign Exchange market.

    He said that the apex bank also intervened in the Small and Medium Enterprises (SMEs) and invisible segments, with 50 million dollars and 45 million dollars.

    Okorafor reiterated that the Bank’s intervention was to maintain its commitment to sustain liquidity in the market to meet genuine requests as well as deepen flexibility in the foreign exchange market.

    He said the CBN would continue to work on achieving the objective of convergence of rates in the various segments of the market, and would continue to strive that the forex market guaranteed transparency in the sale of foreign exchange.

    Okorafor said only last week, the CBN threatened to sanction any Deposit Money Bank (DMB) in breach of its earlier directive of March 3.

    The directive instructed them to, among other things, open teller points for retail Forex transactions and to have electronic display boards in all their branches, showing rates of all trading currencies.

    He said the bank’s firm position was to reiterate its commitment to ensure liquidity in the foreign exchange market, where all genuine requests would be met in line with extant forex guidelines, noting that it would foster more transparency and make the public become aware that the facilities existed.

    This week’s intervention is significant, coming in the midst of the Monetary Policy Committee Meeting taking place on Monday and Tuesday.

    Monday’s sale follows the major intervention, last week, to the tune of 545 million dollars as the retail Secondary Market Intervention Sales (SMIS) received the largest intervention of 285 million dollars.

    Other segments include the 100 million dollars offered for wholesale SMIS, 90 million dollars for Small and Medium Enterprises (SMEs) window and 70 million dollars for invisibles such as Basic Travel Allowances, tuition fees and medical payments.

    Meanwhile the Naira closed at N363 to a dollar, N485 to the Pound Sterling and N433 to one Euro at the parallel market.

  • MPC to consolidate forex, inflation gains

    MPC to consolidate forex, inflation gains

    The Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) will consolidate on the gains of the foreign exchange policy which has ensured stability as well as the continuous drop in inflation rate at its meeting today and tomorrow.

    The committee is likely to maintain the status quo on all rates according to analysts.

    The decision at the meeting, the fifth this year, is likely to keep the Monetary Policy Rate (MPR), which is the benchmark interest rate, unchanged at 14 per cent, the Cash Reserve Ratio (CRR)at 22.5 per cent, Liquidity Ratio at 30 per cent and the Asymmetric corridor at +200 and -500 basis points around the MPR- benchmark interest rate.

    Managing Director, Afrinvest West Africa Limited Ike Chioke explained at the weekend that the committee members had agreed on the need for more fiscal-monetary policy coordination to sustain improvements in domestic macroeconomic fundamentals.

    He said with the economy now running out of high base effect driven moderation in headline inflation, there is likelihood that inflation rate will rise for the first time since the start of the year in September.

    He said given supposed price-anchored monetary policy regime, the MPC is not likely to cut benchmark rate in a period of rising inflation expectation.

    “MPR has become a less effective Monetary Policy Tool: the case for easing via benchmark rate reduction becomes weaker if the current disparity between the benchmark rate and short-term fixed income yields is taken into consideration. Although the recent bullish streak in the fixed income market has narrowed this spread, it is not enough to justify a cut in interest.

    “While our medium term outlook favours a gradual monetary easing, we believe the stabilisation of the forex market is paramount to achieving monetary policy objectives. The forex market, despite improvements recorded so far in the year, is still in a fragile state as the CBN is yet to harmonise all rates at the official market. As such, in the event that a unified rate is not achieved, monetary easing poses a threat for forex stability”.

    He said the current realities of Nigeria’s budget deficit, suggests the need for the fiscal authorities to continuously fund this disparity, which present tightening stance enhances; though at a higher cost to government.

    Managing Director Cowry Assets Management Limited Johnson Chukwu agreed with Chioke that the MPC will keep rates unchanged.

    “They will keep the rates the way they are. Inflation has moderated to 16.01 per cent and the economy has wriggled out of recession. So, this is not the right time to tamper with rates especially as the economic indicators are moving to positive direction,” he said.

    At the official market, the CBN continued with its weekly Small and Medium Ebterprises sales worth $100 million for spot and short tenured forwards under 60 Days while the Official rate improved from N305.95/$1 the preceding Friday to N305.90/$1 on Monday before eventually closing the week at N305.85/$1.

    This implies a marginal 3bps appreciation Week-on-Week. Similarly, at the interbank market, the domestic currency depreciated from N354.99/$1.00 on Monday to N356.99/$1 on Wednesday, but strengthened to N353.50/$1 by the close of the week, up 0.4 per cent Week-on-Week.

    At the parallel market, the naira exchanged for N369.70/$1 on Monday, strengthened to N367/$1.00 on Tuesday and traded flattish till the end of the week, up 0.5 per cent Week-on-Week.

    Despite the spate of forex interventions by the CBN, the external reserves have remained on the uptrend, reaching a 31-month high of $31.9 billion on September 19. This accretion to the reserves has been largely due to the stability in oil prices as well as improved production volumes and we believe this will give the CBN more impetus to continue with its interventions.

  • MPC meets on forex, interest rates

    The Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) will be meeting tomorrow and on Tuesday to review recent happenings in the economy and take decisions on inflation, interest rate and exchange rates.

    As has been the case with all meetings held so far in 2017, the committee members are expected in this fifth meeting for the year to keep Monetary Policy Rate (MPR) which is the benchmark interest rate unchanged at 14 per cent.

    Analysts predict the MPC will retain MPR at 14 per cent; Cash Reserve Ratio at 22.5 per cent and Liquidity Ratio at 30 per cent as well as retention of the Asymmetric corridor at +200 and -500 basis points around the MPR.

    The committee members are expected to decide on ways to consolidate gains in the foreign exchange (forex) market and the need for more fiscal-monetary policy coordination to sustain improvements in domestic macroeconomic fundamentals.

    Since the last MPC meeting in July, the odds of a near term aggressive monetary policy tightening in advanced economies have slimmed considerably.

    Also, much to the delight of commodity-exporting countries, oil prices have been on a bullish run since start of the month, after initial scepticism that the production cut agreement between OPEC/non-OPEC countries will do little to trim global supply glut, led to bearish bets in July.

    Managing Director, Afrinvest West Africa Limited, Ike Chioke, said the release of several economic data since the last MPC meeting in July have mirrored Nigeria’s current positive outlook for the economy.

    He said the National Bureau of Statistics (NBS) released second quarter 2017 Gross Domestic Product (GDP) figures which confirmed expectations already formed from leading macroeconomic and market indicators such as Purchasing Managers Index (PMI) data, oil production volumes, forex liquidity and company earnings.

    The report showed GDP expanded by 0.55 per cent year-on-year in June, with growth largely driven by the oil sector which rebounded 1.6 per cent year-on-year from a contraction of 15.6 per cent in the prior year on the back of an improvement in oil output.

    Non-oil sector growth however unexpectedly trimmed to 0.5 per cent in second quarter of this year from 0.7 per cent recorded in first quarter. “Whilst we are of the view that slower growth of the non-oil sector, despite improving forex liquidity and recent drive to boost agriculture sector productivity, will strengthen the case for policy easing from dovish members of the MPC, we reason that the hawkish argument may be overriding given the need to sustain recent gains including increased Foreign Portfolio Investment (FPI) and Foreign Direct Investment (FDI) inflow,” he said.

    Chioke said although the improvement in external sector variables and poor growth of non-oil sector may impose a temptation for policy easing, yet, he believes the MPC would keep interest rate unchanged given the need to consolidate gains on stabilizing forex and inflation rates.

    Managing Director, Cowry Assets Management Limited, Johnson Chukwu, agreed with Chioke that the MPC will keep rates unchanged. “They will keep the rates the way they are. Inflation has moderated to 16.01 per cent and the economy has wriggled out of recession. So, this is not the right time to tamper with rates especially as the economic indicators are moving to positive direction,” he said.

    Continuing, he said: “No one thinks of raising rates when the economic recovery is fragile neither will they cut rates at such times.”

    Other analysts said price level remains sticky as the National Bureau of Statistics (NBS) inflation report for August indicated headline inflation marginally decelerated to 16.01 per cent Year-on-Year from 16.04 per cent in July.

    Month-no-Month Consumer Price Index growth have remained high since the start of the year against the backdrop of a food price pressure which took food inflation to an all-time high of 20.3 per cent in July 2017. “With the economy now running out of high base effect driven moderation in headline inflation, our model projects inflation rate will rise for the first time since the start of the year in September. Given supposed price-anchored monetary policy regime, the MPC is not likely to cut benchmark rate in a period of rising inflation expectation,” they said.

    “While our medium term outlook favours a gradual monetary easing, we believe the stabilization of the forex market is paramount to achieving monetary policy objectives. The forex market despite improvements recorded so far in the year, it still is in a fragile state as the CBN is yet to harmonize all rates at the official market. As such, in the event that a unified rate is not achieved, monetary easing poses a threat for forex stability. Furthermore, the current realities of Nigeria’s budget deficit, suggests the need for the fiscal authorities to continuously fund this disparity which current tightening stance enhances; though at a higher cost to government,” they predicted.

    The Nigeria capital market started the week on a bearish note, closing 81 basis points and 71 basis points lower on Monday and Tuesday respectively. However, on Wednesday, investor sentiment strengthened as bargain hunting in large cap stocks pushed the benchmark index 19 basis points northwards and this was sustained on Thursday (0.6 per cent gain). However, the market returned to the red on Friday, down 1.8 per cent to close the week at 35,005.57 points, implying a 2.6 per cent decline Week-on-Week. Consequently, year-to-date return fell to 30.3 per cent while investors lost N325.5 billion as market capitalization trimmed to N12.1 trillion.

    The CBN as also reiterated its stance towards intervening at the Interbank Foreign Exchange market. It also warned speculators against “nefarious activities” whilst stating that necessary checks were in place to guard against unlawful practices.

    At the Official segment of the forex market, the CBN conducted its weekly forex sales with $100 million offered at a fixed rate of N330.00/$1 while Official rate pegged at N305.95/$1 all through the week.

    At the Interbank market, the naira rose by 0.8 per cent week-on-week against the dollar to close at N355.49/$1 on Friday. At the parallel market, the naira held steady at N367/$1 between Monday and Wednesday but closed lower at N369/$1 on Thursday, indicating a 1.1 per cent depreciation Week on-week. At the Investors’ & Exporters’ Window, activities remained robust with weekly turnover put at $671.3 million (ex-Friday) as of writing against $705.1 million recorded last week.

    Notwithstanding, rate opened the week at N359.50/$1 and depreciated on all trading days save for Tuesday where it traded flat, to close the week at N360.25/$1.

     

  • CBN retains interest rate at 14%

    CBN retains interest rate at 14%

    The Monetary Policy Committee (MPC) on Tuesday retained the Monetary Policy Rate (MPR) at 14 per cent due to uncertainties in the global market.

    The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, disclosed this while briefing journalists on the outcome of the 257th meeting of the MPC in Abuja.

    He said: “MPC decided to retain MPR at 14 per cent, retain CRR at 22.5 per cent, retain the liquidity ratio at 30 per cent, retain assymetric corridor at +200 and -500 bases point around the monetary policy rate.’’

    He said the MPR was not eased at this time because it would signal the committees’ sensitivity to growth and employment concern by encouraging the flow of credit to the real economy.

    Emefiele added: “The MPC noted the liquidity suffering in the banking system and continuous weakness in financial intermediation.

    “It agreed on the need to support growth without jeopardising price stability or offsetting other recovering macroeconomic indicators, particularly the relative stability in the Foreign Exchange (Forex) market

    “The MPC thinks that easing at this point would signal the committee’s sensitivity to growth and employment concern by encouraging the flow of credit to the real economy.

    “It observed that easing at this time would reduce the cost of debt service which is actually crowding out government’s expenditure.

    “Also, the risk to easing would further pull the real interest rate down into negative territory.”

    Emefiele said the argument for holding was to ensure workability of the past policies in the economy.

    He said the MPC factored that the high banking system liquidity level, the need to continue to attract foreign investment inflow to support the forex market and economic activity would cause a jump in the system liquidity.

    According to him, the expansive outlook for fiscal policy in the rest of the year and the prospective election related spending will also cause a jump in the system liquidity among other things.

    He said the committee expressed concern over the increasing fiscal deficit estimated at N2.51 trillion in the first half of 2017 and the crowding out effect of high government borrowing.

    NAN

  • MPC to hold rates, consolidate forex gains

    MPC to hold rates, consolidate forex gains

    The Monetary Policy Committee (MPC) is expected to hold all rates constant, tackle inflation while consolidating on recent gains in the foreign exchange market as they meet tomorrow and next to review recent happenings in the global and domestic space.

    The Central Bank of Nigeria (CBN) – led MPC members are likely to face a choice between raising Monetary Policy Rate (MPR)- the benchmark interest rate at 14 per cent and keeping it on hold.

    But analysts predict the MPC will retain MPR at 14 per cent; Cash Reserve Ratio at 22.5 per cent and Liquidity Ratio at 30 per cent as well as retention of the Asymmetric corridor at +200 and -500 basis points around the MPR.

    “We hold the view that whilst the economy is at a turning point for a positive growth trajectory, monetary policy needs to be deployed with focus which may require taking painful but critical decisions. On a balance of considerations, we analyse that the MPC will maintain status quo and consolidate on recent gains made especially in improving the liquidity in the foreign exchange market,” Managing Director, Afrinvest West Africa Limited, Ike Chioke said in an emailed report ahead of the meeting.

    On the interest rate, analysts believe that despite the moderating headline inflation rate, the CBN will tarry a bit in easing monetary policy due to fragility of the forex market recovery. A monetary easing will likely dampen the stability seen in the Foreign Exchange market which remains the main monetary policy anchor.

    The first meeting in the second half of the year is coming against the backdrop of a remarkable improvement in domestic macroeconomic variables although recent developments on the global front offer mixed signals.

    Chioke explained that whilst there are calls from the private sector and government officials to ease monetary policy, given the improvements that have been recorded in economic leading indicators, the MPC will likely ignore this call on the ground to continue to attract foreign investor participation and prevent speculations on the foreign exchange market.

    Other analysts believed that since the last MPC meeting in May, sustained positive developments have continued to support confidence and signal the economy is at an inflection point.

    They forecast the economy to grow 0.7 per cent in the second quarter of this year and estimates financial year 2017 growth at 1.2 per cent.

    Also expected is significant improvement in government revenue following increased oil production volumes, which reached peak level of 2.2mb/d after the reopening of the Forcados terminal, presents soft landing for performance of 2017 budget, passed with record capital spending projected to support growth.

    Already, Manufacturing and Non-Manufacturing PMI (Purchasing Managers’ Index) readings have already indicated slow but steady recovery in economic activities as the average level for Q2:2017 settled at 52.2 and 52.1 points respectively.

    Interestingly, external sector pressures have also eased with banks now increasing daily limits on forex transactions following the CBN’s increased forex interventions as well as the launch of the Investors’ and Exporters’ (I&E) window.

    The price level development seems to be the only blot to an otherwise broadly improving macroeconomic story. Driven by high base effect, headline inflation has moderated from a peak of 18.7 per cent in January 2017 to 16.1 per cent in June. However, the pace of deceleration has fallen short of analysts’ expectation in the past five months due to seasonality factor which has led to a spike in prices of food items.

    With high base effect now thinning out, headline inflation may trend higher as early as July. The MPC could however take solace in continued moderation in Core Inflation which declined to a 14-month low of 12.5 per cent in June to make a case for the easing cycle to start.

    It is also believed that the possibility of further tightening is entirely ruled out given easing external sector pressures, moderating core inflation and downside risk of further increasing already high government borrowing costs.

    In the past two years, MPC’s interest rate decisions have lagged market movement, which explains the disparity between short term market rates (as high as 18.7 per cent) and the MPR which is still pegged at 14 per cent.

    The 100 basis points interest rate cut in 2015 was preceded by a reduction in Open Market Operation (OMO) /T-bills rates, while the move towards tightening in 2016 lagged similar movement in the yield curve.

    Hence, even if there are justifications for easing, the CBN will likely signal this in the primary market for short term securities before making an MPR cut. As it stands, the MPR is redundant as it may not achieve a tightening or easing objective except the CBN signals its objective through market rates.

    The currency market continued to witness consistent improvements in liquidity and rates convergence last week.

    The CBN also sustained its interventions at the interbank market via Wholesale and Retail SMIS which continued to boost liquidity and confidence in the economy.

    On Monday, the apex bank intervened in the forex market, selling $195 million in total – $100 million to the wholesale segment, $50 million to the Small and Medium Enterprises (SMEs) segment and $45 million allocated to the Retail invisibles segment to cater for demand for business/personal travel allowances, school tuition, medical fee among others.

    Against this backdrop, naira exchange rate at the official market appreciated 3bps to N305.8 to dollar from the previous week’s close of N305.90 to dollar.

  • CBN seeks rates convergence as MPC meets

    CBN seeks rates convergence as MPC meets

    Today’s Central Bank of Nigeria (CBN)-led Monetary Policy Committee (MPC) meeting will push for exchange rates convergence and the shoring up of the naira’s value, it was learnt yesterday.

    MPC members are targeting how to ensure that the gap between official and parallel markets shrink further and engender confidence of international investors in the economy.

    The naira continued its strong show against the dollar at the weekend, underscoring the resolve of the apex bank to achieve convergence of rates between the interbank and Bureau de Change segments.

    The dollar along with other convertible currencies at the end of last week crashed against the naira, which gained at the parallel market, exchanging at between N376 and N380 to $1 as against the N390 and N385 at which it exchanged a week earlier.

    However, in other segments of the market – Deposit Money Banks (DMBs) and Travelex, the naira was trading at or below N362 to the dollar. The official market rate stood at N306 to the dollar.

    The CBN said at the weekend that it remained committed to ensuring a convergence of forex rates and that the recent gains would be sustained.  The apex bank will continue its interventions to ensure the stability of the naira.

    It noted that the windows established for Small and Medium Enterprises (SMEs) and for investors and exporters continued to yield the desired results by providing access to forex and easing pressure on the market.

    CBN spokesman Isaac Okorafor reiterated the CBN’s commitment to ensuring that there is enough supply of forex to genuine customers to achieve forex rates convergence.

    The Manufacturers Association of Nigeria (MAN) urged the CBN to drop the lending rate from 14 per cent so as to accelerate productivity and economic growth.

    MAN President Frank Jacobs told the News Agency of Nigeria (NAN) that the MPC needed to review the lending rate downward because the high interest rate regime had stifled growth, productivity and competitiveness of manufacturers.

    He noted that with the appreciation of the naira and further drop in inflation rate, friendlier policies that would stimulate economic growth and boost production should be embraced.

    Jacobs also urged the CBN to create five per cent concessionary interest rate for manufacturers to drive the nation’s diversification agenda and increase contribution to the Gross Domestic Product.

    “If manufacturers have access to low interest rate as done in other climes, we will be able to employ more people and create wealth for the nation through tax,” he said.

    Jacobs said with concessionary interest rate, manufacturers would be able to expand their businesses, create wealth, boost productivity and catalyse economic transformation.