CBN succumbs to flexible FX regime, retains MPR at 12%

The Central Bank of Nigeria (CBN) on Tuesday retained its benchmark lending rate, the Monetary Policy Rate (MPR) at 12 percent but announced that it was adopting the long – awaited flexibility in the management of its Foreign Exchange, but will retain a small window to fund critical transactions in the economy.

The CBN also retained the Cash Reserve Ratio (CRR) at 22.50 per cent;
retained Liquidity Ratio at 30.00 per cent; and also maintained the asymmetric corridor at +200 and -500 basis points around the MPR.

But the CBN sees the economy sliding into a recession by the end of the second quarter of 2016 fueled by delayed passage and implementation of the N6. 06 trillion expansionary budget which was just approved by President Buhari earlier in the month.

“The MPC voted unanimously to adopt a flexible exchange rate policy, to restore the automatic adjustment properties of the exchange rate.

“Consequently all nine members voted to hold and introduce flexibility in managing the foreign exchange rate,” CBN governor, Godwin Emefiele stated, announcing the outcome of the critical Monetary Policy Committee (MPC) meeting in Abuja.

“The CBN will however retain a small window for a funding critical transactions. Details of the operations of the market will be released by the Central Bank at the appropriate time.

…Details shortly