The 12 members of the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) voted unanimously to keep monetary policy rate unchanged. It also held the cash reserve ratio for commercial banks at 20 percent.
CBN Governor Emefiele said there had been no changes to the official naira rate to the dollar which has come under tremendous pressure due to a drying up of vital oil revenues. The naira dropped in value to 302 to a dollar on Tuesday.
Asked whether there would be a devaluation, Emefiele said: “The only answer I can give is that we are already working on different scenarios … under different crude prices.”
Giving details of the MPC meeting the CBN Governor said: “The committee observed that the last episode of low oil prices in 2005 lasted for a maximum period of eight months. However, the current episode of lower oil prices is projected to remain over a very long period.
“Consequently, it is imperative to brace up for a longer period of low government revenues from oil sources, which would necessitate hard and uncomfortable choices as the economy transits to more sustainable sources of revenue, consistent with the economic realities and strategic objectives of the country. In the circumstance, certain tradeoffs must be envisaged and duly accommodated.
“In view of the foregoing, the imperative for consistently sound and coordinated macroeconomic policy has become inevitable. In the medium term within which monetary policy is cast, the need to allow policy to produce the desired outcomes becomes a key consideration in the policy mix.
“Consequently, the bank is fine-tuning the framework for foreign exchange management with a view to ensuring a more effective and liquid foreign exchange market, taking into account Nigeria’s strategic development priorities; with the policies being designed within an environment of regularly ensuring consistency with monetary and fiscal policies.”
According to Mr. Emefiele, Nigeria’s foreign reserve currently stands at $28 billion.