.Premium on black market now 40% as dollar eyes N1,000

Central Bank of Nigeria (CBN) might be facing a leadership vacuum as newly nominated governor, Olayemi Cardoso, and his deputies are yet to be cleared by the Senate.

This might have informed postponement of the 293rd Monetary Policy Committee (MPC) meeting, earlier scheduled for September 25 and 26.

A new date for the meeting, which runs on a rigid timeline, is unknown.
Announcing the postponement in a statement, yesterday, Director of Corporate Communications, Isa AbdulMumin, said: “The MPC of the CBN has deferred its 293rd meeting scheduled for Monday and Tuesday, September 25 and 26, 2023, respectively. A new date will be communicated in due course. We regret any inconvenience this change may cause our stakeholders and the general public.”

This is the first postponement of the meeting in recent times, and it comes amid renewed crisis in the parallel segment of the foreign exchange (FX) market.

Dollar is currently inching close to N1,000/$ and there is fear that naira could see more downside if the N1,000 psychological barrier is broken. As at yesterday, the exchange rate was offered for between N970 and N990 per dollar, the lowest the local currency had ever traded.

The FX market outlook was green at the start of President Bola Tinubu’s administration, following liberalisation of the market and expected take-off of production at Dangote Refinery and other modular refineries. But hope dims on the prospect of reducing the huge FX spent on importation of petroleum products.

With the return of subsidy payment, Dangote and other private refineries are said to have abandoned premium motor spirit (PMS), which makes up 99 per cent of local consumption, for diesel and aviation fuel.

As the FX crisis continues, premium on the black market is floating around 40 per cent or N300 per dollar. At above five per cent, experts have claimed, it is difficult for any economy to stave off market manipulations, including round-trip transactions.

MPC, the rate-fixing arm of the CBN, is chaired by the apex bank governor. The committee decides the interest rate, which determines the direction of inflation, capital inflow and demand for hard currencies, which have huge implications for the FX rate.

Experts said quick resolution of the leadership impasse in the CBN is important to restore market confidence and achieve price stability.

Cardoso and four nominated deputy governors await clearance by the Senate, which resumes on September 26.

The four nominees are: Emem Nnana Usoro, Muhammad Sani Abdullahi Dattijo, Philip Ikeazor and Bala M. Bello.

Reacting to postponement of the MPC meeting, Chief Executive Officer, Dairy Hills Limited, Kelvin Emmanuel, said the change in leadership at the bank has created a vacuum, especially as it relates to the last MPC event.

He added that the next CBN governor and his team could be confronted with several challenges such as forward guidance on interest, inflation and exchange rates.