CBN Adopts “Flexible” Forex Regime

Retains MPR at 12%; CRR 22.5 %, Liquidity at 30%

The Central Bank of Nigeria, CBN, yesterday, announced “a flexible exchange rate regime” in order to make foreign exchange more accessible to Nigerian individuals and corporate organizations that need foreign transactions.

The Governor of the CBN, Mr. Godwin Emefiele, who announced this at the end of the Monetary Policy Meeting, in Abuja,  also said that the Monetary Policy Rate, MPR, was retained at 12 per cent; the Cash Reservse Ratio at 22.5 per cent and Liquidity Ratio at 30 per cent.  The MPR is with asymmetric corridor of +200 basis points and -500 basis points around the MPR.

He equally announced “flexible interbank foreign exchange market structures and the CBN to retain a  window for funding critical transactions.”

Mr. Emefiele did not give details of the “flexible foreign exchange regime”.  When journalists asked him to explain, he simply said, “the details of the new policy would be released in due course”

The apex bank has been under immense pressures from the International Monetary Fund, IMF, some financial analysts and interests that represent foreign investors, to devalue the Naira.  The Buhari administration has until now resisted the calls, explaining that being an import-dependent nation, it does not see how such a strategy could benefit the economy.

In fact, it argued that the Nigerian economy would be worse off.

Details later….