The Central Bank of Nigeria’s Monetary Policy Committee (MPC) yesterday tactically devalued the naira from N150.00 to the US $1.00 to N160.00 to US$1.00 and maintained the band of +/-3.0 per cent.
“This means that the naira should float roughly within a range of N150.00/US1.00-N160.00/US$1.00, unless extraordinary shocks necessitate a change in stance” the CBN stated.
However, it kept on hold its Monetary Policy Rate (MPR), the rate at which the apex bank lends to banks at 12 per cent.
Before this official announcement, the band was plus or minus three per cent of N150 to the dollar, thus allowing a band of between N150/$ and N154.50/$.
But with a new top band of N160/$, it then means that the naira is now allowed a new freedom of 6.67 per cent above N150/$.
Addressing journalists shortly after the one-day meeting held in Abuja, the CBN governor, Sanusi Lamido Sanusi said the move to devalue the naira was consistent with market demand.
He also said the committee agreed to keep the Cash Reserve Ratio at 8 per cent.
He pointed out that devaluing the naira was imminent in order to protect investors from losing their money to exchange rate fluctuation as well as ensuring relative stability of the naira.
“The primary responsibility of the CBN is price stability; we don’t really provide growth but we provide the environment where investors feel safe to invest,” he stated.
Sanusi explained that a combination of fiscal adjustments and moderate depreciation in the exchange rate of the naira brought about maintaining the current interest rate at 12 per cent.