Sanusi, has vowed to defend the Naira. He said he was prepared to use
the nation's foreign reserve to ensure the currency's stability.
Briefing the newsmen at the end of the Monetary Policy Committee
meeting in Abuja, yesterday, he said that the argument of those
pushing for the devaluation of the Naira did not make any valid
economic sense in an import-dependent country like Nigeria.
Mallam Sanusi insisted that the CBN would stick to its position unless
forced to do otherwise.
His words, "as far as the Naira is concerned, the CBN has always said
that we are committed to its stability. I know there are some people
who don't share that view. But I have not personally heard any
economically valid argument as to the benefits of devaluating the
Naira up to this point in time.
"It will not improve our export nor reduce our imports into the
country. It will not improve our fortunes as long as our structural
reforms have not been implemented.
"My view and the view of the CBN is that if we will have to use some
of our reserves to support the currency, we will. No central bank
governor will say that he will not support the currency but we want to
be very clear in our minds and to the public that there is no country
in the world that will allow its currency to be determined by the
market.
"Certainly, the currency is neither over-valued nor under-valued. We
are not looking for a stronger currency nor a weaker one. We just want
an anchor of expectations: people want to pay school fees; people want
to import raw materials; investors wants to be able to predict the
returns they would have on their investments; and we think ultimately
that it is more important than having a reserve at $50 billion or $40
billion.
"We will use the reserves and the interest rates and I believe we have
gone through the most difficult period. Hopefully the next months will
not be as difficult as the last one or two. We expect that the Naira
will be maintained within our target band but the message is that we
are committed to the stability of the exchange rate and we will not,
unless we are forced, to allow the Naira to weaken. I think I should
make that very clear."
$41. 7 foreign reserve
The CBN boss noted the decline in external reserves to the current
$45.27 billion but said it was better that the $41.19 billion recorded
at the end-September, last year.
According to him, "the Committee (MPC) noted that this level of
accretion is too low given the relatively high price of crude oil and
further underscores the need for much-needed reform of the oil
sector", and said measures would be taken to address the unbridled
demand for dollar in the foreign exchange market.
Measures against dollarization
Mallam Sanusi said that money laundering could be the only main factor
for the high dollar demand and that new policy measures would soon be
announced by the apex bank.
He however, refused to disclose what the policy measures would be, in
spite of newsmen' attempts at his revealing the details.
He lamented that, "Nigeria has become the largest importer of the U S
Dollar in the whole world and said that only a firm policy against the
dollarization of the Nigerian economy could save the situation.
MPC decisions
The governor announced that the Monetary Policy Rate, MPR, was
retained at 12.0 per cent with a symmetric corridor of 200 basis point
around the MPR by the MPC.
His words, "the Committee noted that the actions taken at the last MPC
have served the purpose of helping the naira avoid the fate of other
developing country's currencies by keeping it relatively stable. It
also noted the continued moderation in inflation and the benign
outlook for the next six months.
"The Committee decided by a vote of 11 members to hold the MPR at 12.0
per cent. One member voted to reduce the MPR by 50 basis points. 11
members voted to retain the symmetric corridor of 200 basis points
around the MPR while one member voted for an asymmetric corridor of
200 basis points above the MPR and 400 basis points below the MPR. All
members voted to retain the 50.0 per cent Cash Reserve Requirement
(CRR) on public sector funds, and 12.0 per cent CRR on private sector
deposits."
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