Central Bank of Nigeria’s FX policy has not borne the desired fruits – Report
Measures adopted by the Central Bank of Nigeria to ensure the stability of the Naira have not borne desired fruits.
This was disclosed in a report titled “Central Banker Report Cards 2021: The Art Of Timing”, published by Global Finance.
In the report card ranking, Emefiele-led CBN’s was scored a “C” grade level in performance, maintaining the same grade given last year. Last year kept central bank governors on high alert, as a global health crisis threatened fiscal, as well as physical health.
What the report is saying
The report acknowledges the continued efforts by the CBN to intervene in the forex market, however, the results have been less than favourable. The report said, “Nigeria’s central bank has engaged in deliberate measures to ensure the stability of the Naira. The measures have included a tight grip on the local currency and even halting the sale of forex to bureau de changes. Unfortunately, the measures have not borne the desired fruits. In early September, the Naira was on a free-fall hitting a record low of N532 to the dollar.”
The report also stated that “In many aspects, the volatility of the Naira is synonymous with the reign of Emefiele, which since 2014 has been characterized by rising inflation and tremors in the banking industry.”
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The report highlighted the CBN monetary policy challenges and hailed the progress in the eNaira, Africa first CBDC.
“In July, the apex bank held its benchmark rate at 11.5% for a fifth straight meeting. The decision was informed by the fact that the current situation neither gives room for tightening as it will hurt output growth nor, loosening, as it will exacerbate inflationary pressures. In June, inflation stood at 17.75%, well above the bank’s ceiling. Notably, the bank is gearing to launch a digital currency, e-Naira.”
Nigeria still experience is forex problems as the exchange rate between the naira and the US dollar at the official Investors and Exporters (I&E) window closed at N416.25/$1, while the black market trade around N570/1$.
Methodology
Global Finance editors grade the world’s leading central bankers on a scale of A to F, with A being the highest grade and F being the lowest, based on a series of objective and subjective metrics, including the appropriate implementation of monetary policy for each country’s economic conditions, with input from analysts, economists, and financial industry sources. Performance from July 1, 2020, to June 30, 2021, is used to make decisions.
