Emmanuel Thomas
Abuja, May 25, 2016 – The Central Bank of Nigeria (CBN) has opted to adopt a flexible exchange rate policy as part of effort to reverse inability of banks to meet up with increasing demand for forex.
The apex bank came up with the decision in a communique after a meeting of the 9-man Monetary Policy Committee(MPC) in Abuja. In the communiqué signed by CBN’s Governor, Godwin Emefiele, the apex bank said management of the bank would work out modalities for implementation of the new policy.
“Accordingly, the MPC decided that the Bank should embrace some level of flexibility in the foreign exchange market. Given the imperative for growth, the Management of the Bank has been given the mandate to work out the modalities for achieving the desired flexibility that is in the overall interest of the Nigerian economy and when the implementation of the new framework would begin’’, the communiqué said.
The MPC also observed that the exchange rate opened and closed at N197 to the US Dollar at the interbank market in the period under review.
The Bank would however, retain a small window for funding critical transactions and that details of operation of the market would be released in due course.
“In summary, the MPC voted to: (i)Retain the MPR at 12.00 per cent; (ii) Retain the CRR at 22.50 per cent; (iii) Retain the Liquidity Ratio at 30.00 per cent; and (iv) Retain the Asymmetric Window at +200 and -500 basis points around the MPR 13; (v) Introduce greater flexibility in the inter-bank foreign exchange market structure and to retain a small window for critical transactions’’, the bank said.
