Published On: Wed, Jan 25th, 2017

Cynicism over CBN retention of forex stance

RMB noted CBN Governor Godwin EmefieleLAGOS, (CAJ News) – A financial firm is pessimistic of the Central Bank of Nigeria’s ability to halt the depreciation of the Naira against the United States Dollar.
The is in reaction to the apex bank maintaining its stance on the foreign exchange policy.
On Tuesday, as was widely expected, CBN kept the official monetary policy rate unchanged at 14 percent for the third meeting running.
Additionally, the cash reserve ratio was left steady at 22,5 percent.
“Similar to the rhetoric from the previous Monetary Policy Committee meeting, the governor (Godwin Emefiele) stressed that the central bank was fairly limited in its ability to lift the economy from the doldrums into positive growth territory,” Rand Merchant Bank stated on Wednesday morning.
The financial house said a key reason for why the economy had essentially
stalled was the lack of FX policy credibility.
“The governor was unmoved about the growing discrepancy between the official and the parallel market rates and went on to state that ‘there is no need to panic’.”
As such, the bank projected inflationary pressures to persist.
“We do not see the central bank being able to maintain its contentious FX policy and expect the naira to close the year at 375 versus the US dollar.”
CAJ News

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