The Central Bank of Nigeria at the MPC meeting held last week maintained interest rate at 13 percent and Cash Reserve Requirement at 20 percent by 500 basis points.
The apex bank also retained public sector CRR at 75 percent. This is coming on the heels of the MPC meeting of January 29- 30, 2015 and ignoring calls to further devalue the naira for the second time runniing.
At the MPC meeting, 11 members voted in favour of retaining the MPR rate at 13 percent, private sector CRR at 20 percent while the public sector CRR, 75 percent and liquidity ratio 30 percent.
The MPC expressed satisfaction with Nigeria’s economic growth and the Decmber 2014 inflation rate, saying they were satisfied with the current pricing of the Nigerian local currency,the naira,compared to the United State’s dollar.
They said some of the risks affecting the nation’s economy negatively included the worsening insurgency and its impact on farming and food supply, the persistent drop in the prices of crude oil and its impact on reserve accretion, coupled with the re-ocuring excess liquidity in the banking system.
Meanwhile, the CBN has also said it will stop the sale of dollars to Bureau de Change and other authorised buyers.
This was contained in a circular from the Director, Trade and Exchange Department of the apex bank, Mr. Olakanmi Gbadamosi, titled, “Utilisation of RDAS and Interbank funds/review of the foreign Exchange Trading Positions of Banks”
The circular read: ‘This is to inform all authorised dealers that in continuation of the review of developments in the foreign exchange market and to curb speculative demand in the market, both RDAS and interbank funds should henceforth be used, strictly for funding of Letters of Credits, Bills of Collection and other Invisible transactions, subject to appropriate documentation as provided by extant regulations.
Consequently, RDAS and interbank funds will no longer be sold to BDCs and other authorised buyers, while the weekly sales of forex to BDCs will be sustained by the CBN based on the liquidity needs of the market.