Lagos – Calls to devalue the Naira are
reportedly dividing the Central Bank of Nigeria’s (CBN’s) Monetary Policy
This comes amid the local currency losing value against
major currencies following the weakening oil prices in the international
The MPC has resisted calls to devalue but Rand Merchant
Bank said, “There is dissension among the MPC ranks, or at least that’s what
the minutes of the last committee gathering suggest.”
The financial firm said one of the more outspoken MPC
members, Dr Adedoyin Salami, advised his counterparts in January to devalue the
exchange rate to USD/NGN220 and allow it to trade within a 5 percent band.
He is quoted as saying the absence of an exchange rate
management policy had diminished Nigeria's attractiveness as a destination for
international capital flows.
Also read: Falling CBN reserves lead to devaluation call
The International Monetary Fund echoed the sentiment last
"However, Dr Salami’s proposal fell on deaf ears as the
committee opted to maintain its FX (foreign exchange) stance — a mentality
which is likely to persist in the short term," RMB said.
The institution said President Muhammadu Buhari’s stern
opposition to a more flexible exchange rate would do little to calm market
anguish and quell volatility in the parallel market.
"The current FX situation is impractical.
Ultimately, the deterioration in Nigeria’s dual deficits will necessitate a
larger exchange rate adjustment to correct the trade and fiscal imbalances," RMB said.
- CAJ News