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Naira Devaluation Not Based On Parallel Market Rate – CBN

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The Central Bank of Nigeria (CBN) has said the devaluation of the Naira does not depend on the parallel market rate.

Nigeria’s apex bank Governor, Godwin Emefiele, made the submission on Thursday while speaking at the end of the last 2020 Monetary Policy Committee (MPC) meeting, in Abuja.

Emefiele warned analysts using parallel market rates to force the apex bank to devalue the Naira to desist from such action, adding that the parallel market is only about five percent of the foreign exchange market.

The CBN governor revealed that the Naira had already been devalued by about 28 percent in 2022 just like many other currencies of the world.

He said: “It is unfair that even analysts who should know are using parallel market rate to say that our currency is overvalued and therefore calling for devaluation. This is very unfortunate.

“The parallel market is a shallow market of only about five percent of the foreign exchange market which is patronized by people who go there for cash to offer bribes and corruption. Parallel market is the place where people who don’t want to provide documents go.

“I don’t see why those who should know are asking for devaluation. We don’t agree that the determination of the foreign exchange should be based on a market that is tainted. We will not use this as our benchmark to determine the value of our currency.

“At the E& I (Import& Export) Window, the rate is about N386 or N387 / $1. We don’t control the I & E window. Why will anyone use the parallel market to say that the exchange rate is over N480/$1?

Speaking further, Emefiele stated that the apex bank has retained the Monetary Policy Rate (MPR) at 11.5%, adding that the MPC retained the asymmetric corridor of +100/-700 basis points around the MPR.

It also retained all other parameters with Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.

The CBN governor added that about N149 billion had been given to 317 beneficiaries of the COVID-19 Fund, consisting of Targeted Households, as well as, Small and Medium Enterprises (SMEs).

Emefiele said that the organization was encouraged to increase funding beyond the initial N50 billion due to the positive impact it had on the Nigerian economy by boosting outputs and consumption.

He disclosed that another N92 billion was given to operators under the Agri-business/Small and Medium Enterprises Investment Scheme (AGSMEIS).

The CBN governor added that another N60 billion to healthcare sector players, in the battle to contain the COVID-19 pandemic and improve the nation’s health sector.

Similarly, Emefiele disclosed that about N2. 9 billion of the Creative Industry Initiative Fund has been disbursed among operators in the fashion, music and Information, Communication Technology and the movie industries.

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