Nigeria's Central Bank to Introduce Flexible Exchange Rate Regime
Nullifies N197/$ exchange rate
After months of resisting calls for the adoption of a flexible foreign exchange regime, the Central Bank of Nigeria (CBN) on Tuesday finally bowed to pressure, stating that it would introduce greater flexibility in the Interbank foreign exchange market structure and retain a small window for critical transactions for prospective investors.
CBN Governor, Mr. Godwin Emefiele, said in arriving at MPC’s decisions, the nine members of the committee, who attended the meeting, assessed the relevant risk profiles and came to the conclusion that although the balance of risks remained tilted against growth, previous decisions needed time to crystallise.
He said: “Consequently, in a period of stagflation, the policy options are very limited. To avoid complicating the conditions, the committee decided on the least risky option to hold. With the foreign exchange market framework now ready, the MPC voted unanimously to adopt greater flexibility in the exchange rate policy to restore the automatic adjustment properties of the exchange rate.
“Consequently, all nine members voted to hold and introduce greater flexibility in managing the foreign exchange rate. The bank would however retain a small window for funding critical transactions.
“Details of operation of the market would be released by the bank at an appropriate time.”
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