Nigeria’s Central Bank Denies Liberalizing Exchange Rate Structure

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CENTRAL BANK, LIBERALIZING

Nigeria’s Central Bank Denies Liberalizing Exchange Rate Structure

Nigeria’s Apex Bank has denied media reports which stated that there has been a liberalization in the country’s exchange rate structure.

Central Bank of Nigeria (CBN) Director, Corporate Communications on Wednesday, Mr Isaac Okoroafor, in a statement, said the nation’s exchange rate remains stable.

SKYTREND NEWS had earlier reported that the Apex Bank had adjusted the exchange rate of the Naira, thus making the foreign exchange market liberal and determined by market forces.

According to TheCable report, in the exchange rate section of the Central Bank’s website, the bank replaced the N305/$ rate to ‘the naira exchange rate is market-determined’.

Okoroafor however reaffirmed the bank’s commitment towards ensuring stability in foreign exchange market.

His Words:

“There has been no change in Nigeria’s exchange rate structure. The CBN has not floated the naira. The exchange rate remains stable. Speculations and reports to the contrary are false,” Okoroafor said in response to the Bloomberg report.

CBN Governor, Mr. Godwin Emefiele, at a recent forum with private sector operators at the weekend, maintained that the bank would continue to defend the naira, saying that the CBN Act demands that the bank “defend” the Naira using the foreign exchange reserves.

“In effect, the CBN would be disobeying the law establishing it, if it sits idly by and allow the Naira to be determined wholly by the so-called market forces.

“Second, those who call for floating of the currency betray their willful ignorance of the effects of significant depreciation, however short-lived, on inflation.

“Several empirical analyses have shown that the pass-through of changes in the exchange rate on consumer prices is almost one-to-one. This implies that for every percentage point depreciation in the Naira, there is almost the same rise in inflation.”



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