The Central Bank of Nigeria, CBN, yesterday, announced a flexible exchange rate regime aimed at making foreign currencies more accessible.
With this action, the CBN has nullified the official exchange rate regime of N197/dollar.
The CBN took the measure following severe pressures on external reserve and foreign exchange supply crisis.
Governor of the CBN, Mr. Godwin Emefiele, who announced this at the end of the Monetary Policy Meeting, in Abuja, also said the Monetary Policy Rate, MPR, was retained at 12 per cent; Cash Reserve Ratio, 22.5 per cent; and Liquidity Ratio, 30 per cent.
In the face of severe pressures on external reserves and foreign exchange supply crises, the CBN abandoned its fixed rate policy in favour of a flexible and multiple market model, which implied a floating exchange rate regime.
The apex bank’s Monetary Policy Committee, MPC, which made this decision, chose to retain its Monetary Policy Rate, MPR, at 12 per cent, Cash Reserve Ratio, CRR, at 22.5 per cent and Liquidity Ratio at 30 per cent.
Details of the new foreign exchange market policy, according to the CBN Governor, Mr. Godwin Emefiele, would be released in due course.
He, however, said the apex bank would retain a special window to fund critical transactions in foreign exchange, which would likely attract a concessionary rate.
By this development, the interbank foreign exchange market, which has been dead for sometime now, is revitalised on unrestricted exchange rate basis, while the Bureaux de Change, BDCs, would continue their operations, thus creating multiple exchange windows.
He, however, ruled out any consideration for channelling foreign exchange to the BDCs.
Briefing the media after the MPC meeting, Emefiele explained that “the MPC voted unanimously to adopt a flexible exchange rate policy to restore the automatic adjustment properties of the exchange rate,” adding that it voted also to “retain a small window for funding critical transactions” and that “details of operations of the market would be released by the Central Bank at the appropriate time.”
By Emeka Anaeto, Emma Ujah, Peter Egwuatu and Franklin Alli
