Denying Bloomberg report, CBN says not scrapping multiple exchange rates

Central Bank of Nigeria (CBN) yesterday refuted reports that it had floated the naira, Nigeria’s currency.

Director, Corporate Communications, CBN, Mr. Isaac Okoroafor, stated this in reaction to a Bloomberg report that the bank had signaled it would float the naira and allow it to weaken past its official rate as it gradually unwinds its regime of multiple exchange rates.

But CBN spokesman who described the report as false, said the naira exchange rate remained stable.

Okoroafor reaffirmed the bank’s commitment towards ensuring stability in foreign exchange market.

“There has been no change in Nigeria’s exchange rate structure. CBN has not floated the naira. The exchange rate remains stable. Speculations and reports to the contrary are false,” Okoroafor said in response to the Bloomberg report.

CBN Governor, Mr. Godwin Emefiele, at a forum with private sector operators in Lagos last weekend, restated the bank’s commitment to continue to defend the naira, saying that the CBN Act demands that the bank “defends” the naira using the foreign exchange reserves.

“In effect, CBN would be disobeying the law establishing it, if it sits idly by and allow the naira to be determined wholly by the so-called market forces.

“Second, those who call for floating of the currency betray their willful ignorance of the effects of significant depreciation, however short-lived, on inflation.

“Several empirical analyses have shown that the pass-through of changes in the exchange rate on consumer prices is almost one-to-one. This implies that for every percentage point depreciation in the naira, there is almost the same rise in inflation.”

He also said policies of the apex bank in the past five years had been focused on protecting the purchasing power of the poor and vulnerable persons in the country.

 

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