CBN to stem use of dollars for local transaction – Emefiele

The Central Bank of Nigeria, CBN, is to go after shylock landlords and private school owners who demand rents and fees in dollars within Nigeria with a view to bringing them to book, for contravening the nation’s legal provisions. It said that only the naira is a legal tender in Nigeria.

Briefing journalist on the outcome of yesterday’s monetary Policy Committee, MPC, meeting in Abuja, the Governor of the CBN, Mr. Godwin Emefiele, who announced the decision of the MPC to retain Monetary Policy Rate at 13 per cent, explained that transacting any form of business using dollars in the country was illegal and those involved would made to face the consequences.
His words, “The CBN is going take actions. We are going to be looking at areas where people are doing what I call the unholy act of attacking the currency and making demands that are not needed.
“You have heard of dollarisation of the economy. We will take actions to prevent that. The currency for doing businesses in Nigerian remains the naira. And we will be looking at areas where people are making demands for foreign currency. People, who are landlords that are asking for rents in dollars; schools that are asking for fees in dollars, or transacting business in dollars in Nigeria, are illegal and will like to advise those involved in these practices to desist from them because CBN will very soon come after them”.
The CBN boss announced retention of the Cash Reserve Ratio, CRR, on Private Sector deposits at 20 per cent; retain CRR on Public Sector deposits at 75 per cent; and retain the liquidity ratio at 30 per cent, in it decision to tighten the system.
On the issue of the ability of foreign investors to repatriate their capital from Nigeria, Mr. Emefiele said there is nothing like prioritising sales of foreign exchange to foreign investors.
He explained, “What we have done is, yes, we made a promise to them that there will be free entry and free exit, that who ever is coming to invest in Nigeria, when ever they decide to exit the market that they will be unhindered. They will have unhindered access to foreign exchange for them to do so and I know that all the demands coming from foreign investors have been met.
“We have injected liquidity and we believe that the market is deep enough. We believe the supply in the market is strong enough to meet all the demand in the market.
“Part of transparency is the closure of the official foreign exchange market where we decided to remove the rent-seeking activities in the market, the arbitrage in the market where we saw that some people sought to take advantage of the vulnerabilities in the foreign exchange market and we took that bold move and I am happy that it is a statement that we are transparent in dealing with that issue.
With that I am optimistic that JP Morgan would remove us from the watch list”.
On Naira outlook, the governor said that his team at the apex bank was comfortable with the current rate and was optimistic that the nation’s currency would appreciate after the elections as investor-confidence would soar.
“Naira outlook moving forward, although the exchange rate at the Bureaux de Change is at N122 /$1, I would like to say that segment remains a shallow market compared to the inter-bank market in terms of percentage in the foreign exchange market, it is very insignificant and that market deals with transactions that are not documented.
“For that reason we are not looking at the naira outlook by looking at the BDCs’ rate. But when you look at the exchange rate at the inter-bank market which is about N 198/$1, I believe even the pressure that we have seen in the market as a result of the drop in crude oil prices, that adjusting the currency at the current rate of N198/$, I would just say it’s alright.
“I think the number of actions that we will be taking going forward -improve supply into the market, look at areas where demand inefficiencies can be cut, and I am sure in due cause you will see the CBN taking actions that will look at areas where people make demands that are not effective and demands that are not useful to the economy, we will try as much as possible to control those. Then after when we look at the interplay between demand and supply, we will see some remarkable appreciation of the currency.
“I am very optimistic that both foreign and domestic investors are looking at the currency and we are optimistic that after the elections, confidence will improve because elections will come, and go, Nigeria will remain and business will continue as usual”.
The CBN boss put the nation’s foreign reserve at $30 billion which has the capacity to support import for about six months.