March 26, 2024

UPDATED: CBN raises rate to 24.75 %

CBN has cleared another $400 million of valid FX backlog  — Cardoso

CBN Governor, Yemi Cardoso

…Insists all verified FX backlog cleared

…puts fraudulent claims at $2.4 b

…Collaborating with security agencies on Binance

By Babajide Komolafe Economy Editor and Emma Ujah, Abuja Bureau Chief 

The Central Bank of Nigeria (CBN) has again raised the Monetary Policy Rate by 200 basis points from 22.75 to 24.75 percent. 

Briefing the press on the outcome of the 294th Monetary Policy Committee (MPC) meeting in Abuja, on Tuesday, the Governor of CBN, Mr. Olayemi Cardososo, also announced an adjustment of the asymmetric corridor of +100/-300 basis points.

He said that the Cash Reserve Ratio (CRR) of Deposit Money Banks was retained at 45 percent, while the CRR for merchant banks was moved from 10 to 14 percent.  The Liquidity Ratio was left at 30 percent. 

Mr. Cardoso explained that members of the MPC were faced with continuing with the tightening cycle or a hold to see further impact of last month’s rate hike but at the end, after reviewing the balance of risks, it was decided that a further tightening was the way to go.

All valid FX claim cleared

The CBN boss insisted that the backlog of all valid FX transactions had been cleared, adding that security agencies were investigating infractions discovered by the audit firm.

His words, “We got a reputable audit firm to look into the documents and they did a thorough job and came out to say that a number of these transactions did not qualify. 

I have said this before.  Some cases you have allocations of millions of dollars which were never requested.

“You also had cases where there were requests but no Naira backing, yet were allocated foreign exchange.  And the list goes on. Those were some of the infractions.  It was for those reasons that we refused to validate those transactions.

“Apart from the fact that documentation was not satisfactory, in many cases, there were outright illegal.  The law enforcement agencies are now looking at those transactions that as far as we are concerned, were not valid to be paid.

“I would emphasise that if there is any information to the contrary, we would in due course consider that.  But as at today, that is exactly where we stand. The law enforcement agencies are taking a very hard look into those transactions.

READ ALSO: CBN raises interest rate to 24.75%

“I have said it before and I will say it again, that the valid transactions, as far as, the CBN is concerned, have been taken care of.  We are also not unmindful that, just may be, some stakeholders may have some backlog over a period of time or the other.  We are not unmindful of that.  Some may go back years over a period of time.

“We have done what we can to make the market open, transparent and liquid as much as possible.  So those particular stakeholders are free to access the market.

$2.4 b fraudulent claims

The governor disclosed  that what was considered as fraudulent claims was about $2.4 billion.

Collaboration on Binance, we don’t regulate cryptocurrency.

On Binance, the governor said that CBN has collaborated with security and other agencies of government in handling the case.

“Let me clarify that the CBN collaborates with other government agencies.  A month ago, we had collaboration with EFCC, security agencies, ONSA, SEC and we have been sharing information together.

“The responsibility for regulating crypto currency is not our own.  It is strictly that of SEC,” Mr. Cardoso said.

Why CBN opened dairy products import

 The CBN boss also explained that the decision to allow those interested in the importation of dairy products into the country to access the FX market was to ensure a level playing field in the sector.

He said, “we have decided to make the market as transparent as possible.  Because it is this lack of transparency that drives people away from the market.  Where the market players feel that there is something that isn’t quite right, that there is distortion, there is tendency for them to pull back. 

“We observed that in this particular case, only six companies were allowed to bring in dairy products and its derivatives.  Only six.  We believe we should not constraint anybody that wants to come to the FX market to purchase FX from doing so.   We should leave the market open and transparent.  Certainly we cannot restrict that market to just six players.” 

The  governor reiterated that CBN would not go.back.on its stance about not getting directly involved in reactor interventions. 

Vanguard Newspaper