Published On: Mon, May 23rd, 2016

Talk of devaluation recurs as CBN committee meets

Central Bank of Nigeria, CBN

Central Bank of Nigeria, CBN

LAGOS, (CAJ News) – THE current week is seen as a significant one for the Central Bank of Nigeria’s Monetary Policy Committee as it meets on the  back of a myriad of economic challenges.

The committee of the apex bank was scheduled to meet on Monday amid setbacks such as the gross domestic product contracting by 0,36 percent in  the first quarter of 2016 from 2,1 percent growth in the last quarter of  2015 and 3,9 percent in the same period last year.

Growth in the manufacturing sector experienced the biggest fall due to the  exchange rate critics believe is rigid.

“Second quarter growth will also feel the pinch as oil production is  severely threatened by pipeline attacks,” stated Rand Merchant Bank in its  Weekly Markets Report released ahead of the meeting of the MPC. “This week will be a telling one for the naira as the MPC meets,” the  think-tank added.

It noted recent government comments had alluded to a much-needed review of  the current foreign exchange policy stance, stirring speculation of an  imminent devaluation.

The CBN’s rate was maintained at 196 to 197 to the United States currency  while the parallel market depreciated to 344 to 347 from 322/ 324 on the back of renewed demand pressure.

This has been attributed to the revised framework for the provision of  fuel supplies, where oil importers are now permitted to source hard currency outside of the official window to finance their purchases.

The local currency has lost value against major currencies in a setback linked to the falling oil prices in the international markets.

CAJ News

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