The Governor of the Central Bank of Nigeria, CBN, Malam Sanusi Lamido Sanusi, has affirmed that he would not devalue the nation’s currency – the Naira, saying he would rather use the nation’s foreign reserves, which currently stands at $45.27 billion to stabilize the Naira.
Briefing newsmen at the end of the Monetary Policy Committee (MPC) meeting in Abuja, yesterday, Sanusi said that the argument of those pushing for the devaluation of the Naira did not hold water economically especially in an import-dependent country like Nigeria.
The CBN Governor insisted that the CBN would stick to its position unless forced to do otherwise.
His words, “as far as the Naira is concerned, the CBN has always said that we are committed to its stability. I know there are some people who don’t share that view. But I have not personally heard any economically valid argument as to the benefits of devaluating the Naira up to this point in time.
“It will not improve our export nor reduce our imports into the country. It will not improve our fortunes as long as our structural reforms have not been implemented.
“My view and the view of the CBN is that if we will have to use some of our reserves to support the currency, we will. No central bank governor will say that he will not support the currency but we want to be very clear in our minds and to the public that there is no country in the world that will allow its currency to be determined by the market.
“Certainly, the currency is neither over-valued nor under-valued. We are not looking for a stronger currency nor a weaker one. We just want an anchor of expectations: people want to pay school fees; people want to import raw materials; investors want to be able to predict the returns they would have on their investments; and we think ultimately that it is more important than having a reserve at $50 billion or $40 billion.
“We will use the reserves and the interest rates and I believe we have gone through the most difficult period. Hopefully the next months will not be as difficult as the last one or two. We expect that the Naira will be maintained within our target band but the message is that we are committed to the stability of the exchange rate and we will not, unless we are forced, to allow the Naira to weaken. I think I should make that very clear.”
The CBN boss noted the decline in external reserves to the current $45.27 billion but was quick to add that it was better than the $41.19 billion recorded during the same period last year September ending.
According to him, “the Committee (MPC) noted that this level of accretion is too low given the relatively high price of crude oil and further underscores the need for much-needed reform of the oil sector”, and said measures would be taken to address the unbridled demand for dollar in the foreign exchange market.
Malam Sanusi explained a correlation between the high demand for dollars and money laundering, saying new policy measures would soon be announced by the apex bank.
He, however, refused to disclose what the measures would be despite attempts by newsmen to get him to reveal the details.
He lamented that, “Nigeria has become the largest importer of the U S Dollar in the whole world and said that only a firm policy against the dollarization of the Nigerian economy could save the situation.”
The CBN Governor announced that the Monetary Policy Rate, MPR, was retained at 12.0 per cent with a symmetric corridor of 200 basis point around the MPR by the MPC.
His words, “the Committee noted that the actions taken at the last MPC have served the purpose of helping the naira avoid the fate of other developing country’s currencies by keeping it relatively stable. It also noted the continued moderation in inflation and the benign outlook for the next six months.
“The Committee decided by a vote of 11 members to hold the MPR at 12.0 per cent. One member voted to reduce the MPR by 50 basis points. 11 members voted to retain the symmetric corridor of 200 basis points around the MPR while one member voted for an asymmetric corridor of 200 basis points above the MPR and 400 basis points below the MPR. All members voted to retain the 50.0 per cent Cash Reserve Requirement (CRR) on public sector funds, and 12.0 per cent CRR on private sector deposits.”