The Central Bank of Nigeria (CBN) governor, Mr Godwin Emefiele, says maintaining stable exchange rate to avoid depreciation of the Naira is better than building foreign reserve buffers.
Emefiele told newsmen on Sunday that this was part of the outcome of the Nigerian delegation’s meetings with investors and institutions at the International Monetary Fund (IMF) and World Bank Group (WBG) Annual Meetings in Bali.
He said that all frontiers and developing markets have suffered not just depreciation, but had also lost reserves.
“We are very conscious of the need to build buffers but unfortunately I must say that we are in the period where it will be difficult to talk about building reserve buffers.
“We can only build reserve buffers if we want to hold on to the reserve and then allow the currency to go, and wherever it goes is something else.
“So it is a choice we have to make and at this time the choice for Nigeria is to maintain a stable exchange rate so that businesses can plan and we do not create problems in the banking system assets.”
According to him, like other emerging markets nations, Nigeria has also lost reserves but only marginally because it had managed to sustain stability in its foreign exchange market.
The CBN governor said that the IMF and the World Bank advised that nations should build country specific policies and fiscal and structural reforms that would boost economic growth.
Mrs Zainab Ahmed, Minister of Finance, said the World Bank’s Human Capital Development Index (HCI) ranking, which placed Nigeria low at 44 per cent on stunting, was disheartening and depressing.
She, however, said that the Federal Government saw the rating as a wake-up call.
“We admit that this pervasive action was due to long years of under-investment in human capital, which we have before now realised and for which we have been addressing.
“Apart from major policy actions, some decisive actions are being taken to address the situation.”
According to her, the delegation held meetings with the two rating agencies-Fitch and Moody’s and presented to them the summary and synopsis of the recent economic and financial developments in Nigeria.
She added that it was an opportunity for the rating agencies to be able to objectively evaluate Nigeria’s credit.
Ahmed said she also met the IMF Managing Director, Ms Christine Lagarde and discussed Nigeria’s economy in view of the 2019 general elections.
She assured Lagarde that the election year would not pose any threat to the nation’s economic prospects.
Mr Udoma Udo Udoma, Minister of Budget and National Planning, said that to improve HCI, the nation had improved budgetary allocation to health and education.
He said that allocation to education moved from N22.5 billion in 2015 to N102.9 billion in 2018.
He added that allocation to health was reviewed from N26.6 billion in 2015 to N86.49 billion in 2018.
He said also that N55.19 billion had been added to the health budget in 2018 through the National Health Act.
The Naira on Thursday appreciated marginally against the dollar at the Investors’ Window (I & E), exchanging at N363. 57, stronger than N363.94 posted on Wednesday.
The daily market turnover stood at 392.9 million dollars.
The Nigerian currency closed at N306.40 to the dollar at the official CBN window.
At the parallel market, the Naira closed at N359 to the dollar, while the Pound Sterling and the Euro closed at N478.30 and N420.
Trading at the Bureau De Change(BDC) segment saw the Naira close at N360 to the dollar, while the Pound Sterling and the Euro closed at N478.30 and N420.
Meanwhile, in spite of the continuous intervention by the Central Bank of Nigeria (CBN) at the foreign exchange market and the increase in the price of oil at the international market, the manufacturing sector witnessed slow growth in the month of September.
The manufacturing sector continued to expand in September, though at a slower pace, the latest CBN Manufacturing Purchasing Managers’ Index (PMI) report, shows.
It showed that the September Manufacturing PMI eased to 56.2 from 57.1 in August, indicating expansion in the manufacturing sector for the 18th consecutive month.
The report noted that “a composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally contracting.”
The Central Bank of Nigeria (CBN) has continued its intervention in the retail Secondary Market Intervention Sales (SMIS) by injecting a total of $317.52million in that segment of the market in addition to CNY58.40 million in the spot and short-tenored forwards segment.
The figures obtained from the apex Bank on Friday revealed that the US dollar-denominated interventions were only for actors in the agricultural and raw materials sectors while the Yuan was for Renminbi denominated Letters of Credit.
Confirming the figures, the CBN’s Director, Corporate Communications Department, Mr. Isaac Okorafor, said the Bilateral Currency Swap Agreement (BCSA) with the Peoples’ Bank of China had continued to receive encouraging responses from customers.
While noting that Friday’s sale was the fifth in the series of interventions, he said the BCSA was achieving its major objectives of reducing the use and influence of a third currency transactions; reducing the pressure on the naira exchange rate; easing trade transactions between Nigeria and China and maintaining financial market stability in Nigeria.
Mr. Okorafor further assured that the CBN would remain committed to ensuring that all the sectors of the foreign exchange market continue to enjoy access to the needed foreign exchange by Nigerians.
It will be recalled that the Bank on Tuesday, September 18, 2018 intervened in the inter-bank Foreign Exchange Market to the tune of $210 million.
Meanwhile, $1 exchanged for N361 at the Bureau de Change (BDC) segment of the foreign exchange market, while CNY 1 exchanged for N53.
Source News Express
The Nigeria’s inflation rate has rebounded in August for the first time since January 2017 after recording 18 consecutive months of downward trend, according to the National Bureau of Statistics (NBS).
In the August inflation report by the statistics bureau on Friday, the nation’s Consumer Price Index (CPI), which measures inflation, rose by 0.09 percent points to 11.23 percent in August.
This implies the prices of goods and services rose at a faster rate in review month – just like June 2018 – when compared with July 2018.
The headline inflation had been on steady decline from 18.72 percent since January 2017 to 11.14 percent in July 2018, this was after it fell to 18.55 percent in December 2016.
In spite of the persistent decline during the period, the macroeconomic variable remained above the Central Bank of Nigeria’s (CBN) acceptable band of 6 percent to 9 percent.
The CPI measures the composite changes in the prices of consumer goods and services, such as food, transportation, and medical care, purchased by households, over a period.
The NBS said food inflation also surged to 13.16 percent YoY in August up from 12.85 percent recorded in previous month, while core inflation, which excludes agricultural produce, dropped from 10.2 percent in July to 10.0 percent in August.
The CBN had expressed fear over the possibility of a rebound in the macroeconomic indicator in the second half of 2018 as a result of increased spending ahead of the 2019 general elections.
In August, the CBN said it may consider raising its key lending rate for the first time in two years if the inflation rate worsens.
The Monetary Policy Committee (MPC) of the CBN in its July meeting had retained the Monetary Policy Rate (MPR) at record-high of 14 percent for the 11th consecutive time since 2016 to monitor the magnitude of the liquidity impact of the fiscal injection and election related expenditure.