The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, on Friday ruled out the possibility of the Federal Government further devaluing or adjusting the Naira.
He spoke with State House correspondents at the Presidential Villa, Abuja.
According to him, the government would now rather focus improving and deepening the foreign exchange market by improving supply of foreign exchange into the market.
“There has been a lot of talk on whether or not we want to depreciate our currency again. The truth is that we had adjusted the currency by depreciating it from N155 to N197 in February this year.
There is no intention to depreciate or adjust the currency any longer.
“The President has been very clear on this The Vice President has been very clear on this and let me further reiterate our position at the Central Bank of Nigeria that we are not considering any further depreciation of the currency.
“What we are trying to concentrate on right now is how to improve and deepen the foreign exchange market by improving supply of foreign exchange into the market,” he said.
To do so, he said that the government will try to encourage people to export and earn export proceeds which should be use to import whatever they need to import.
However, he said that the government will also concentrate on how to reduce the import of items that can be produced in the country.
Speaking further, he said: “So that is our focus. I’m saying and very soon the CBN will be launching a campaign called PAVE, which means ‘Produce locally, add value and export your product and earn your foreign exchange for your imports’ because this is the only way we can support the efforts of CBN in intervening and providing foreign exchange in the market to meet the import needs of our people.
“It is very clear, what we need to do is reduce our propensity to import but we will not depreciate our currency. For now we will not,” he said.
On the list of banned items, he said: “First of all the CBN does not have the power to ban the import of any item. What we have done is to exclude certain items that are imported into the country from obtaining foreign exchange from the Nigerian foreign exchange market.
“Yes it is also true we held a stakeholders’ meeting with the organized private sector and prominent and leading private sector stakeholder were at that meeting. It was not meant for the press.
The purpose of that meeting was to engage the private sector to make the private sector understand that government realizes that they are engine of growth and we also used the opportunity to explain to them the basis and purpose of those policies that we have introduced and at the end of that meeting they were very happy, they saw our position and indeed at the end of that meeting some of them in fact provided us with the names of some items that should be included in the list that should be excluded from foreign exchange.
“And I must confess that at this stage given the determination of some of the organized sectors to say that yes, they produce these items and that we should exclude those items from foreign exchange we are reviewing that list and we may in due course include more items products that can be produced in Nigeria in the list of items that will be excluded from foreign exchange in the Nigerian foreign exchange market,” he stated
Vice President Yemi Osinbajo on Thursday declared that devaluation of the Naira was not an appropriate option in the current economic realities in the country for the President Muhammadu Buhari’s administration.
According to him, a further devaluation of the Nigerian currency is not healthy for the Nigerian economy.
He spoke at the Presidential Villa, Abuja while receiving Ambassadors from Italy and Canada.
Osinbajo, in a statement by Senior Special Assistant on Media and Publicity, Laolu Akande, said “I don’t agree on devaluation and it is not that I am doctrinaire about it. In the first place, it is not a solution-we are not exporting significantly. And the way things are, devaluation will not help the local economy.”
“What we need to do is to start spending more on the economy and then things will ease up a bit,” he added.
He said that the issues around the economy are no exact sciences and that what is important is to be reasonably flexible in dealing with them.
He outlined federal government’s plans to set-up a $25B Infrastructural Fund which would be sourced from local and international sources including through Nigeria’s Sovereign Wealth Fund and the pension fund among others.
The Vice President disclosed that already other sovereign wealth funds have indicated interest in the fund which would be used to address the nation’s decaying road, rail and power infrastructures.
He said; “this is our approach to speeding up the country’s infrastructural development.”
Prof. Osinbajo restated that the current foreign exchange restriction is a temporary measure to ensure that foreign exchange is not depleted substantially at a time when the price of oil in the international market is dropping.
He said that the restriction is also to bring some stability to the country’s foreign reserves without which Foreign Direct Investment (FDI) might be affected.
According to him, FDI is more forward looking than portfolio investment which is being affected by the decision to manage the foreign exchange resources of the country at this time.
“I am not sure devaluation is the issue, but how to ensure foreign direct investment which is more useful,” the Vice President noted adding that he expects a bit more stability and direction in the next few months.
He disclosed that the federal government would work with the Central Bank of Nigeria to ensure that legitimate businesses are not badly impacted by the current foreign exchange restrictions, especially those who have previous contracts and loan commitments.
The Vice President received the Italian Ambassador in Nigeria, Mr. Fulvio Rustico and the Canadian High Commisioner in Nigeria Mr. Perry John Calderwood.
He expressed the appreciation of the federal government to the two envoys on behalf of President Muhammadu Buhari and also looked forward to closer and deeper ties between Nigeria and the two countries.
A delegation of top executives from Citigroup led by Mr. Jim Cowles also paid a courtesy call on the Vice President earlier Thursday.
• World Bank seeks further devaluation of currency
Calls by the global financial institutions on Nigeria to devalue her currency reverberated at the weekend at the International Monetary Fund (IMF) / the World Bank Group meetings in Lima, the Peruvian capital in South America.
The IMF’s African Department Representative Director Ms. Antoinette M. Sayeh said further devaluation of the naira was required “as a way of adjusting to the reality of the current economic conditions”.
The ADR-IMF representative , who spoke at a press conference at the Peruvian capital, said the adjustment was necessary to ease tension for private sector investments, stressing that foreign exchange flexibility plays an important role for investors and their investments.
The Central Bank of Nigeria (CBN) has said a further devaluation of the naira is out of consideration, a stance President Muhammadu Buhari has endorsed.
Insisting that the naira be devalued, the IMF acknowledged that there are other factors, in the case of Nigeria, that call for examination.
“The exchange rate pressures in Nigeria and other oil producers has been considerable in the course of this past year because of what has happened in terms of, for example, exchange earnings as oil prices have reduced considerably, and the demand for foreign exchange in a number of conditions continues to exert considerable pressure on their exchange rates. In the case of Nigeria, of course, a number of other factors have been at play.”
She listed some of these factors to include the last general elections this year and the uncertainty about what the possible outcome of the elections would be. Since the elections, Ms. Sayeh said, “continued uncertainty about the policy direction that the current administration is going to take, the waiting (until lately), for a cabinet and the vision and plans for pursuing the reform effort, and what can be expected from that, continued to be factors that have led to pressures on the naira.”
While acknowledging the measures so far adopted by the CBN in response to the volatility of the exchange rate, the IMF official, however, critised the steps, saying the policies are detrimental to businesses.
In her words:” Of course, the Central Bank has introduced administrative measures that limit access to foreign exchange and that banned certain imports as a way of restricting the demand for foreign exchange. Those are measures that are quite detrimental, we think. It has certainly led to a lot of unhappiness in the private sector, as far as we’ve been aware, and understand that private investors see this as very detrimental to their economic activities. So it’s not something we think is sustainable or advisable. We hope that there will be an opportunity to review those restrictions and permit the exchange rate to continue to adjust.
“The exchange rate being an important instrument of adjustment in countries that have a flexible exchange rate, we think it’s been appropriate to allow the exchange rate to depreciate, with a view to helping to contain the demand for more foreign exchange, and to help contain the level of imports that was not sustainable in light of the shock to the Nigerian economy. So the exchange rate plays a very important role there.
“There are countries that don’t have the exchange rate, and as a result have an even more arduous burden of adjustment on the fiscal side,” that’s what Nigeria and other countries that have an exchange rate can avoid. So we think it’s appropriate to have the exchange rate adjust, she argued.
On the restriction of access of foreign exchange for certain imports by the CBN, Ms. Sayeh said the measure was hurting the public.
“ Clearly, some of the products that are being disallowed are products that average Nigerians buy. Those restrictions on those products are already making it harder for the average person to buy milk or to buy milk at an affordable price. So they’re already feeling the impact of those restrictions. Not in a very beneficial way, so we think it’s certainly advisable to have a second look at those,” Ms. Sayeh said.
The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele yesterday said the naira is “appropriately priced” and the apex bank does not plan any adjustments for the time being.
“At this time…the currency is appropriately priced,” Emefiele told a conference in London.
Africa’s largest oil producer has restricted imports since June to offset a fall in vital oil revenues which has battered public finances and the nationals currency.
The naira has an official exchange rate peg of 196.95 per dollar but has traded weaker than that in parallel markets.
After months of insistence that its outstanding invoices be paid in U.S. Dollars, Manitoba Hydro International Nigeria Limited (MHINL) has agreed to collect payments in Naira.
MHINL is the Canadian firm contracted by the Federal Government to manage the electricity Transmission Company of Nigeria (TCN).
The firm’s acceptance of the naira payment is contained in a letter signed by MHINL’s Director, Cassandra Siemens, and addressed to the Managing Director of System Operations/Market Operations (MO) of TCN.
MO is a division of TCN that issues market settlements and invoices due to the market participants and service providers in the Nigeria Electricity Supply Industry (NESI).
In the letter dated Sept. 29, MHINL recalled that it had given a notice of suspension under the management contract of TCN for reason of non-payment in U.S. dollars as per the contract terms.
The firm said, however, that “on a case by case basis, MHINL will write their acceptance for payment of the U.S. Dollars in Nigeria.’’
The Canadian firm asked the MO to “immediately transfer 93,764.09 U.S. dollars in naira “at the prevailing exchange rate,’’ into its Zenith account whose number was stated in the letter.
The firm, however, hinted that the request was a “onetime exception,” indicating that it would still pursue its bid to be paid in dollars.
NAN sources said that the development signified a twist to months of disagreement that stalled the payments as the MO refused to pay the invoices in dollars as requested by MHINL.
In refusing to pay in dollars, the Managing Director of MO, Mrs Vera Osuhor, had argued that doing that would breach a CBN directive that stated that all payments must be made in local currency.
Miffed by that insistence, MHINL had written CBN but got a response that only affirmed the MO’s position that every payment must be in naira.
NÀN, however, reports that MHINL’s position that naira payment was only a “onetime exception,’’ only confirms that the disagreement was not over as the firm was still sticking to its desire for dollar payment in future.
Contacted on the new development, Osuhor declined to give details of the payments, but said that it only vindicated her.
“In declining to pay in dollars, the MO was only being obedient to the CBN directive; we did not just refuse to pay deliberately. There are laws and those laws must be obeyed,” she said.
Osuhor agreed to shed more light on allegations that the MO had opened a separate account into which electricity trade funds were being paid.
The said unilateral account had sparked reaction from the Nigeria Electricity Regulatory Commission (NERC) which in a letter signed by Dr Usman Abba-Arabi, Head, Public Affairs, and dated Sept. 23, threatened to sanction the MO if it did not close the account.
“The misinformation on the account issue is worrisome because it was just a salary account.
“It was not an account into which electricity market funds were being paid; salary account and market account are two different things.
“Before we opened that account, we wrote to the Permanent Secretary of the Ministry of Power and got the permission to do so,’’ she said.
Osuhor explained that the account was opened under pressure because workers had threatened to go on strike over the non-payment of salaries.
“The workers were on our neck and we had to open the account because we had access money to pay.
“ Immediately we paid the salaries, we closed the account and that was all,” she said.
She traced the development to an infraction in payment of salaries of MO workers after the TCN removed their names from the payroll.
The Central Bank of Nigeria (CBN) Governor Godwin Emefiele yesterday ruled out a naira devaluation, assuring investors not to panic concerning the Treasury Single Account (TSA).
Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following the directive to government departments to move their funds from commercial banks into a TSA at the apex bank.
The policy is part of new President Muhammadu Buhari’s drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits.
With global oil prices tumbling, banks and companies are already struggling with the consequences of a dive in Nigeria’s energy revenues that has hit the naira currency and triggered flows of capital out of the country.
Then JP Morgan kicked Nigeria out of its influential Emerging Markets Bond Index last week due to restrictions that the central bank imposed on the currency market to support the naira and preserve its foreign exchange reserves.
Since taking office in May, Buhari has vowed to rein in Nigeria’s dependency on oil exports which account for 90 percent of foreign currency earnings. However, he has faced criticism from investors for failing to appoint a cabinet yet or outline concrete policies.
Amid confusion over the implementation of the single account policy, overnight interbank lending rates spiked to 200 percent, but Emefiele denied the policy had provoked a liquidity crisis.
“There is no shortage of liquidity,” he told Reuters, pointing to an oversubscribed sale of treasury bills on Wednesday. “A spike is a momentary action. It’s sentiment.”
“I do not think there is any need for anybody to panic,” he added. Nevertheless, the interbank naira market was paralyzed for a third day on Thursday, with banks unwilling to lend to each other, even when rates fell back to 20-30 percent.
In a sign of the financial ructions, commercial bank cash balances with the central bank that are normally earmarked for foreign exchange or bond purchases plunged to N173 billion yesterday from N486 billion two days ago.
Emefiele said the TSA amount would be less than N1 trillion, although he did not give details beyond saying the measure was designed to root out graft.
His comments did not instill confidence in the new rules among economists. “It’s an example of the government deciding on a policy without thinking through the mechanics of how its implementation will work,” said Alan Cameron at Exotix, a London-based specialist in frontier markets – a higher risk subset of emerging economies.
Emefiele ruled out a further devaluation of the naira following two in the past year due to the collapse in oil revenues, insisting that its current level of 197 to the dollar would be held. “There will not be a devaluation because right now the currency is appropriately priced,” he said.
In a series of unconventional interventions to protect the naira, the bank has blocked access to foreign currency for the importation of 41 items ranging from soap and toothpicks to cement and private jets. “There is no intention to review any of those items on the 41 list because we believe that they are items that can be produced within the country,” he said, adding that the list might grow.
In the face of dwindling oil prices, the naira exchange rate should be adjusted to reflect the prevailing economic reality.
By so doing, the Central Bank of Nigeria (CBN) will be bridging the gap between exchange rate in the official and parallel (black) markets, an economists has said.
Mr Bismarck Rewane, Financial Derivatives Company Limited Managing Director, urged the CBN to act now to avert a worse economic failure.
Crude oil prices closed higher on Monday after bouncing back from six and half-year lows. Specifically, oil is trading at less than $50 per barrel, half the price of a year ago.
Rewane said the CBN needs to adjust the local currency in view of developments in the global market, saying “if you don’t do the right thing at the right time, you may do more later.”
“Sooner or later, the currency will adjust because you cannot create a synthetic situation. And your signals must be consistent and logical. If you know that you have enough money to support the currency, then why are you locking the door? So, there are some inconsistency in signal and the price,” he added.
According to him, the challenges facing the Nigerian economy presently are more of external. “If you are a Nigerian government official and you came to power with the belief that if you fix the refineries and others, things would be fine. But the problem has gone beyond that! External imbalances are different from internal imbalances.
“Once you are integrated with the rest of the world, what happens over there affects you and you cannot run contrary and it is a question of time before you fall in line,” he argued.
The economist noted that crude oil price is determined by the market and geo-political considerations, adding that once the oil price came down, the four countries that were mostly hit were Russia, Venezuela, Iran and Nigeria.
“So, we are looking for an optimal solution. If you asked me a year and half ago, what is the floor price of crude oil, I could bet with you that it will not go below $95 per barrel and then the price was $110 per barrel. And I was considered to be one of the realistic or pessimistic observers. If you asked me six months ago, I would have said $65 per barrel. But if you ask me today, I will quickly grab $45 per barrel,” he said.
Despite the oil price volatility, Saudi Arabia, the world’s largest oil exporting country, has maintained its production levels despite a collapse in the price of oil. It may issue bonds, or Islamic bonds known as sukuk to finance some spending. The kingdom has more than $600 billion in reserves it can draw upon should expenditure outstrip income from oil exports.
The country has built reserves, cut public debt to near-zero levels and is now working on cutting unnecessary expenses while focusing on main development projects and on building human resources in the kingdom.
He said the total revenue shared by all governments in August through the Federation Accounts Allocation Committee (FAAC) declined to N511.8 billion. This was based on average oil price in June of $63.75pb and is expected to further fall to N320 billion this month.
He said the dollar appreciation may push oil prices further down, adding that August FAAC was down slightly by 1.3 per cent when compared to N518.5 billion in July figure.
He said although states have started receiving CBN intervention fund worth N338 billion, debt repayment will become difficult with the slide in oil prices, adding that some states have already restructured previous debt obligations.
Rewane’s position which is contained in the FDC’s September Economic Report, said interest rates at the interbank oscillates between 10 and 80 per cent per annum, and that the local currency is now at N220 at the parallel market and still dropping.
“The naira has been held artificially stable by administrative measures,” he said, pointing out that the currency is supported by reduced leakages from oil and revenue management, while capital inflows have shrunk to as low as $2.6 billion per quarter. Inflation has spiked seven out of nine months in 2015.
The economist said administrative measures are temporary and unsustainable and cannot guarantee long term conservation of, or accretion in reserves.
An applicant, Chikezie Chukwu, has been arraigned for allegedly being in possession of fake naira notes and stealing N70,000.
Chukwu, 20, was arraigned in an Ebute Meta Chief Magistrate’s Court in Lagos on a four-count charge of obtaining under false pretence, stealing and being in possession of fake notes.
The Investigating Police Officer, Adewunmi Oderinmade, told the court that the offence was committed on August 22 at 2nd junction Road, Ikotun.
Oderinmade told the court that Chukwu purchased goods valued at N70,000 from one Esther Ojetokun and paid her with fake naira notes.
The accused, he said, could not give satisfactory reasons about the fake notes in his possession after his arrest.
The offence, he said, contravened Sections 285, 312, 370 and 409 of the Lagos State of Nigeria, 2011.
Chukwu pleaded not guilty.
Magistrate M.O Olajuwon granted the accused N50,000 bail with one surety in the like sum. He adjourned the case till September 28.
The naira is under pressure due to the inflow of ‘hot money’ or speculative capital into the economy. The demand for dollar, which reduced a few weeks ago, after some policy shifts at the Central Bank of Nigeria (CBN), has risen to new heights. COLLINS NWEZE writes that rising inflation and continued drop in oil prices are compounding an already dangerous trend.
Though the naira closed at N197 to the dollar at the interbank on Monday, last week, it still exchanged at N218 at the parallel market, from N210, by Friday.
The sudden slide in its fortune has been linked to increased hot money in circulation and rising demand for dollars.
Hot money is the flow of funds (or capital) from one country to another, to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts).
The speculative capital flows are called “hot money” because they can move very fast in and out of markets, potentially leading to instability.
The Nation investigations showed that the demand for dollar is very high as buyers are willing to pick it at any rate. This has been worsened by rising demand by importers who cannot access the greenback from the official forex window.
With some policy shifts at the Central Bank of Nigeria (CBN), especially its forex restriction on 41 items, and gradual rebound in oil prices, the naira found its feet around N197 to dollar but inflation has risen from eight per cent in December to 9.2 per cent in July.
At its weakest, the naira was quoted at a record low of N235.60 to the dollar, a decline of 30 per cent since November. The naira also dropped to N220 at the parallel market before the CBN closed the Retail Dutch Auction System (RDAS) in February. It trades at N210 against the dollar at the parallel market.
Also, the foreign exchange reserves fell 10.04 per cent to $28.87 billion by March 4, but now stands at $30.5 billion. The CBN has used the reserves to support the ailing naira, which has been hammered by falling global oil prices and uncertainty over the delayed presidential elections due later this month.
Although the currency was able to stabilise at N197 to dollar at the interbank, many insist that it has, indeed, fallen from the Olympic heights. The interbank market is the top-level foreign exchange market where banks exchange different currencies. The banks can either deal with one another directly, or through electronic brokering platforms.
Though it was unclear what stabilised the naira before the volatility, interventions from the International Oil Companies (IOCs) cannot also be ruled out.
On forex restrictions’policy of the CBN, former Executive Director, Keystone Bank, Richard Obire, said the policy is expected to encourage importers to look inwards and begin local production as the prices of the affected items will shoot up in the market because of high cost of buying forex from the black market.
He said in the long run, the benefits of the CBN’s decision, would outweigh whatever temporary pains it may have at the moment. “Those who decided to produce those goods locally and export them, will earn foreign exchange instead of depleting the reserves. In the short-to-medium terms, it will be painful but subsequently, it will improve the overall economy,” he said.
He said even the International Monetary Fund (IMF) believes that the CBN should protect the reserves because of the huge benefits of such decisions on the naira. “If the CBN keeps funding these items, the demand for the dollar will rise and this will affect its push for infrastructural development needed to boost the real sector,” he said.
He said the policy could be used to achieve developmental objective, adding that using the available capacity to produce locally, will reduce overall forex demand and when the local production is enhanced, more people will find jobs within the economy.
Former President, Chartered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu, said the policy was meant to fix the battered foreign reserves. He, however, insisted that the some items in the list, have no business being there because they are raw materials. “I have nothing against the policy, but the CBN must be cautious not to drive manufacturers to the parallel market. I expect the regulator to be one step ahead of the stakeholders,” he said.
“The CBN should always consider the unintended consequences of its actions and must set a band which the naira must not exceed.”
Unegbu said it is not right to formulate policies simply to attract foreign investors, because if the investment climate is conducive, they will come without being persuaded.
The Executive Director, Treasury and International Banking, UBA Plc, Femi Olaloku, called on the government to diversify the productive bases and forex earnings of the economy.
This, he said, would enable the economy overcome the challenges brought about by dwindling revenues from crude oil sales. “Dwindling oil prices around the globe poses serious challenges to a developing economy like Nigeria, hence the need for government to also consider various diversification options,” he said.
More stakeholders react
President, Association of Bureau De Change of Nigeria (ABCON), Alhaji Musa Gwadabe, said some of the steps taken by the CBN have helped the market to witness the absence of spurious demand and illegitimate transactions.
Gwadabe
Sub-Saharan Africa Economist at Renaissance Capital and co-Author of the Fastest Billion Yvonne Mhango said the CBN has shown commitment to dealing with dwindling fortune of the naira.
“While Nigeria cannot do much to influence the oil price, the combination of measures sends a powerful signal to all stakeholders on the CBN’s intent to do what it can to preserve macroeconomic stability,” she said.
Analyst at Standard Chartered Bank, Razia Khan, said the CBN has set clear cut objectives on its monetary policy direction. He said the stock exchange positive reaction was an indication that local and foreign investors now understand where the naira is heading. “As long as there is clarity and good investment climate, the equities market will benefit,” she said.
She advised the government to improve on infrastructure, noting that such action would make Nigeria’s investment climate more attractive for foreign investors.
New measures
The CBN has reacted by fixing the rate at which banks can buy dollars from IOCs at not more than N2 spread to its clearing rate, dealers said. The policy is the bank’s latest attempt to prop up the naira hit by the drop in oil prices.
The apex bank has directed that all importations involving electronics, finished products, information technology, generators, telecommunication equipment, and invisible transactions would henceforth be funded from the interbank foreign exchange market only.
In a circular to all authorised dealers, CBN Director, Trade & Exchange Department, O. I. Gbadamosi, told stakeholders that the policy was to maintain the existing stability in forex market and strengthen the various policy measures, already initiated by the CBN.
On the development, Head, Africa Strategy at Standard Chartered in London, Samir Gadio, said: “The importation of electronics, finished products, information technology, generators, telecomms equipment, and invisible transactions importations shall, henceforth, be limited to the interbank market only.
“We’re seeing more foreign-exchange flexibility. Perhaps, they do not want to burn FX reserves unnecessarily. It’s a risky strategy though as the market will now look for the topside of dollar-naira and also because the lower rates will reduce the incentive to hold naira fixed-income assets.”
BDCs policy
Last June 23, the CBN, among others, raised the minimum capital requirement of BDCs to N35 million from N10 million. It raised the mandatory caution deposit to N35 million from $10,000.
Again, on July 7, the apex bank extended the deadline from July 15 to July 31, in response to appeals and intervention of the Association of Bureau De Change Operators of Nigeria (ABCON) and both chambers of the National Assembly.
In a circular, CBN’s Director, Financial Policy and Regulation, Kelvin Amugo, said interest would be paid on the mandatory caution deposit of N35 million, based on the savings account rate. The CBN, Amugo said, would, on expiration of the deadline, cease to fund any BDC that failed to comply with the fresh requirements.
Naira crises complex
The misfortune of the naira seems complex. The thinking is that massive inflow of forex from surging oil prices and the boom in the capital market were responsible for the appreciation of the naira in the past few years. Unfortunately, oil prices have nosedived and capital market is in a shambles. The fall in the price of oil has major consequences on government revenue, aggregate output, capital formation investment, employment, trade and fiscal balance.
The 2008 global financial meltdown also contributed to naira’s freefall. Chief Executive Officer, Financial Derivatives Bismarck Rewane, said Nigeria was unprepared for the shock. “The economy believed to be one of the most resilient in the world was caught unawares by the global crisis,” he added.
Analysts said a gradual appreciation of the currency would require building confidence in the financial system and price of crude oil in international market. This is what is going to drive the exchange rate now and beyond. We cannot isolate what is happening in the global economy like the issue of diversification of energy sources.
Inflation statistics
The National Bureau of Statistics released the Consumer Price Index for last July, stating that the nation’s inflation rate had remained unchanged at 9.2 per cent. The actual CPI released by the bureau came against experts’ forecast, which had predicted that the rate could increase to 9.4 per cent.
In the CPI report, which was made available to our correspondent, the bureau said the 9.2 per cent figure was the same rate at which the index grew in June.
The report said: “In July, the CPI, which measures inflation, rose by 9.2 per cent (yearly), unchanged from the rate recorded in June.
“The headline index has held at the same rate for the second consecutive month as a result of muted rises in the food and non-alcoholic beverages, housing, water, electricity, gas and fuel, among others.”
Monthly, the report said the pace of the increase in the headline index eased for the second consecutive month, increasing by 0.7 per cent in July, from 0.9 per cent recorded in June.
It stated that the urban index increased by 9.2 per cent yearly, also relatively unchanged from the rate recorded in June, while the rural index increased marginally by 9.2 per cent, from 9.1 per cent in June.
On a monthly, both the urban and rural indices increased by 0.7 per cent, lower from 0.9 per cent recoded in June.
