CBN denies devaluing naira, commits to gradual rate convergence

The Central Bank of Nigeria (CBN) says it has not devalued the naira, even as it pledged its commitment to gradual rate convergence. The Deputy Governor in charge of Economic Policy, Dr. Kingsley Obiora, made this known, yesterday, in Abuja at the Fiscal Liquidity Assessment Committee (FALC) retreat.

This comes as the Import and Export window has adjusted the rates but it appeared that the CBN has not adjusted the rates officially. A report claimed the apex bank had devalued the local currency to N631/$. But a statement signed by the Acting Director of Corporate Communications, Dr. Isa AbdulMumin, described the report as false, pointing out that the Investors and Exporters (I&E) window was trading at N465/$ yesterday morning. He noted that the apex bank was committed to a gradual convergence of the rates around I&E window.

But a financial analyst, Paul Alaje, said Nigerians should expect 34 to 38 per cent inflation in the next two to three months if naira is devalued, which he said would happen in a matter of days.

“No doubt the move will increase flows of foreign portfolio investment and foreign direct investment in dollars and more diaspora remittances without the need for rebate. More companies will also bring in their export proceeds dollars and not divert it to foreign accounts or use it to purchase equipment and bring it to sell,” he said.

Meanwhile, the Permanent Secretary of the Federal Ministry of Finance, Budget and National Planning, Aliyu Ahmed, called for the strengthening of non-oil revenue through the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS) initiatives to drive the contributions of the non-oil to the national revenue.

“Despite the plethora of tax and other revenue generating reform, revenues remain insufficient and below levels that could enable the Government play its pivotal role in sustainable and inclusive development.

“It, therefore, not only calls for strong policy coordination and consistency to bring inflation back to the CBN’s long-run objective and safeguard financial system stability, it stressed the need to ensure policy actions that could lead to the attainment of fiscal goals, leveraging on emerging technological innovations,” he noted.

Director, the Monetary Policy Department, CBN, Dr. Hassan Mahmud, said the CBN would continue to implement various quasi-fiscal measures to support the Federal Government’s effort to manage the economy, address liquidity challenges in the face of emerging global and stimulate domestic growth.

He added: “The government’s response to these headwinds led to substantial budgetary allocations to boost economic activity and provide social safety nets, resulting in significant increases in public debt and its service costs. In addition, the widespread adoption of electronic modes of payment has further impacted monetary policy management in the Central Bank’s efforts to ensure price and financial system stability.

“These developments call for a comprehensive fiscal consolidation effort to boost revenue mobilisation and strengthen the efficiency of public expenditures. It has also become imperative that fiscal and monetary authorities should intensify ongoing collaborative efforts and provide assurances that envisaged macroeconomic objectives are achievable under the present conditions,” he said.