CBN wants naira to depreciate further

The Governor of Central Bank of Nigeria (CBN), Mallam Lamido Sanusi, yesterday, said the apex bank was considering allowing the naira to depreciate further by setting new band of between N155 and N156 per dollar within which the currency can float.

At the moment the CBN has a band of 3 % above or below N150 per dollar. Speaking yesterday in Abuja Sanusi  said: “We think at this point we might move the naira to between N155 and N 156 to a dollar as a midpoint. The CBN will make its stance on the currency clear next week or two.” This was even as the naira weakened further against the dollar in the foreign exchange market, yesterday, closing at N159.52 to the dollar.

The naira declined against the U.S dollar on both the interbank and CBN window yesterday as demand for the dollar outstripped supply at both markets. The naira closed at 159.52 to the dollar on the interbank, weaker than the 156.40 a dollar on Friday. The CBN Governor stated that the apex bank was determined to keep the naira stable at between N155 and N156 per dollar, saying “People will know that in the next 12 months, we will keep the naira within that band. As long as we are not running out of reserves at an outrageous rate we’ll try to keep that stability.”

According to him, “The CBN has been struggling to keep the naira within a band of three per cent above or below N150 per as oil prices declined and demand for imports surged. The Central Bank pegs the currency to help keep price pressure under control.” The CBN said it will review its target band for the naira in the next few days, and depending on where the exchange rate settles may move its midpoint to 155/156 to the dollar, compared to its current 150.

According to him, the CBN will give the naira few more days and see where it settles finally and then it will come out with a new transparent band. He said, “Both the midpoint and the band could change. Whatever it is, we will let the market know very soon. It is more likely to be around 155/156.”

Source: Vanguard