By Emma Ujah
The Central Bank of Nigeria, CBN, has reduced the Cash Reserve Ratio , CRR, from 31 per cent to 25 per cent.
This was one of the major decisions of the Monetary Policy Committee meeting which ended in Abuja, yesterday.
The CBN Governor, Mr. Godwin Emefiele who briefed the press after the meeting however, announced that Liquidity ration and the Monetary Policy Rate , MPR, were retained at 30 per cent and 13 per cent , respectively.
It equally retained the symmetric corridor of 200 basis points around the MPR
External Reserve falls to $30.63 billion
The governor revealed that gross official reserves decreased from US$31.20 billion at end-July 2015 to $30.63 billion on September 17, 2015.
On the performance of the Naira at the forex market, he said that the average naira exchange rate remained relatively stable at the inter-bank segment, but significantly volatile in the BDC segment of the foreign exchange market during the review period.
“The interbank exchange rate opened at N196.95/US$ and closed at N197.00, at a daily average of N196.98/US$ between June 29 and September 18, 2015 representing a depreciation of N0.5K for the period. At the bureau-de-change segment, the exchange rate opened at N224.50/US$ and closed at N211.50. This represented an appreciation of N13.00k for the period.
The relative stability in the inter-bank market and improvement in the BDC segment were attributed to the effects of various administrative and policy measures”.
Growth under severe strains
The governor noted, “the overall macroeconomic environment remained fragile . The economy further slowed in the second quarter of the year, making it the second consecutive quarterly less-than-expected performance.
He added that “growth had come under severe strains arising from declining private and public expenditures.”
Warns economy could slip to recession
“Having seen two consecutive quarters of slow growth, the Committee recognized that the economy could slip into recession in 2016 if proactive steps were not taken to revive growth in key sectors of the economy,”, Mr. Emefiele warned.
He revealed that the apex bank would work more assiduously with the banks to make funds available to the real sectors of the economy, especially, agriculture and manufacturing which have high capacities of mass jobs creation.
TSA has minimal impact om banks
The governor said that the movement of federal government funds from the banks to the CBN did not have any major negative impact on the liquidity conditions of the banks, contrary to widespread speculations.
According to him, “The impact of the movement of funds from the banks to the CBN on liquidity is moderate,” he said, adding, “Nigerian banks are safe and healthy.”
He said that the apex bank would continue to closely monitor the money market to ensure that the policy did not in any way affect the industry and that it had the muzzle to play its roles as a catalyst for the economic development of the nation.
“We will continue to monitor their operations to make sure that continue to operate in an atmosphere in which they can play their financial catalytic roles,” he said.
Mr. Emefiele expressed satisfaction at the result of the foreign exchange restruictions placed on the importation of certain items considered unnecessary and unhelpful to the nation’s macrio-economic development.
According to him, the foreign exchange access restriction was already bringing about the re-opening of factories that had closed down due to their inability of their products to compete with the dumping of foreign goods in the country.
He specifically identified Erisco Tomato Company which had re-opened its factory and had advertised jab vacancies.
He said further, “Producers abroad who have been exporting to Nigeria, when they realized that they cannot continue to produce in their countries and bring the goods to Nigeria, they are now considering shipping their machines here so that they begin to produce in Nigeria. This is what we want. When such companies come and open factories in the country, they will provide jobs for Nigerians.”