Analysts have said the exchange rate and the hot money in the system may force the Monetary Policy Committee (MPC) which ends today to maintain the 12 percent benchmark rate.
There has been strong expectation of a rate cut of the Monetary Policy Rate (MPR) anchor rate in which the Central Bank of Nigeria (CBN) lends to banks in some quarters.
Jimi Ogbobine, research analyst at Consolidated Discount Limited, told BusinessDay that the MPC will be pre-occupied with the exchange rate and the status of the hot money in the Nigerian financial system.
“Recent press reports estimate that the volume of hot money in the Nigerian financial system may be around $10 – $12 billion. In 2012, capital inflows from foreign portfolio investors (FPIs) were a significant source of autonomous foreign exchange. However, these inflows have all but dried up this year especially as FGN bonds approach price target for these FPIs and thus spiking profit taking trades.”
BIODUN COKER
