NAIRA: BASING DEVALUATION ON PARALLEL MARKET RATE WRONG — CBN
Those using parallel market rate to put pressure on the Central Bank of Nigeria (CBN) to devalue the Naira will not have their way. The CBN Governor, Mr Godwin Emefiele gave this indication at the end of the last 2020 Monetary Policy Committee (MPC) meeting, in Abuja, yesterday, 24th of November 2020.
He said “It is unfair that even analysts who should know are using parallel market rate to say that our currency is overvalued and therefore calling for devaluation. This is very unfortunate. “The parallel market is a shallow market of only about five per cent of the foreign exchange market which is patronised by people who go there for cash to offer bribes and corruption. Parallel market is the place where people who don’t want to provide documents go.
“I don’t see why those who should know are asking for devaluation. We don’t agree that the determination of the foreign exchange should be based on a market that is tainted. We will not use this as our benchmark to determine the value of our currency. “At the I&E (Import& Export) Window, the rate is about N386 or N387 / $1. We don’t control the I & E window. Why will anyone use the parallel market to say that the exchange rate is over N480/$1?” According to the governor, the Naira had already been devalued by about 28 per cent this year, just like many other currencies of the world.
COVID-19: N149bn to 317 beneficiaries
Governor Emefiele disclosed that about N149 billion had been given to 317 beneficiaries of the COVID-19 Fund, consisting of Targeted Households, as well as, Small and Medium Enterprises (SMEs). He said that the organization was encouraged to increase funding beyond the initial N50 billion due to the positive impact it had on the Nigerian economy by boosting outputs and consumption. According to him, another N92 billion was given to operators under the Agri-business/Small and Medium Enterprises Investment Scheme (AGSMEIS) and another N60 billion to healthcare sector players, in the battle to contain the COVID-19 pandemic and improve the nation’s health sector.
Similarly, Mr. Emefiele disclosed that about N2.9 Billion of the Creative Industry Initiative Fund has been disbursed among operators in the fashion, music and Information communication technology and the movie industries. According to the CBN boss, “the various funds have been “quite impactful” adding, these have been helpful in moderating the impact of the COVID-19 pandemic in the country.”
An elated Mr. Emefiele said that the various funds disbursements would be done in such a way that all regions of the country would benefit from the interventions. “We have insisted that it should be done in such a way that it will go round all the zones. This will boost consumption and ensure output is impacted for the good of our people.” On the current recession, the governor said, “We are somewhat cautiously optimistic that with the record of performance of various sectors, in the first quarter of 2021, we will exit the recession.”
According to the CBN boss, the external reserves position, stood at $35.18 billion as of November 19, 2020, compared with US$35.95 billion at end of September 2020, as crude oil prices continue to fluctuate with downward pressure. The CBN retained Monetary Policy Rate (MPR) at 11.5% It also retained all other parameters with Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively. Consequently, the MPC retained the asymmetric corridor of +100/-700 basis points around the MPR.