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MPC Meets To Discuss Naira Devaluation

naira1The Monetary Policy Committee will meet next Tuesday, the first this year, to deliberate on a number of issues, including whether to favour devaluation of the local currency or not.

Sources at the Central Bank of Nigeria gave the hint even as currency traders said cautious trading had persisted on the parallel market in the last few days apparently awaiting the outcome of the MPC meeting.

But a ratings agency, Standard & Poor’s, on Thursday said that Nigeria would have to devalue its currency at some stage in 2016 and in gradual adjustments.

The United States dollar has exchanged between N295 and N300 since the beginning of the week ahead of the rate-setting meeting. Reuters also reported on Thursday that corporate dollar demand was likely to put pressure on Ghana’s cedi.

It also noted that the naira weakened to its lowest last week after the Central Bank of Nigeria halted dollar sales to Bureaux de change operators.

The local currency has since stabilised at 300 to the dollar on the parallel market, while on the interbank market, the naira currency has traded around the 197 pegged rate.

The central bank is expected to sell dollars on the interbank market on Thursday, having asked commercial lenders to deposit naira cash in advance payment on Tuesday.

International Monetary Fund Chief Christine Lagarde told Nigerian lawmakers on January 6 that the IMF did not support foreign exchange restrictions, a policy Abuja took after prices for its oil exports collapsed.

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