The Central Bank of Nigeria (CBN) on Tuesday in Abuja announced devaluation of naira by N13 as part of measures the bank said were aimed at strengthening the nation’s economy.
The CBN Governor, Mr Godwin Emefiele, disclosed the devaluation to newsmen after a meeting of the Monetary Policy Committee.
Emefiele explained that under the new arrangement, the naira would now exchange for N168 instead of the old official rate of N155 to one U.S. dollar.
He said the meeting also decided to increase the Monetary Policy Rate (MPR) by 100 basis point from 12 per cent to 13 per cent.
The MPR is the rate at which banks borrow from the Central Bank to cover their immediate cash shortfalls.
The higher the cost of such borrowing, the higher the rate at which banks advance credit to customers.
Emefiele noted that there was an increase in Cash Reserve Ratio (CRR) on private sector deposits by 500 basis point from 15 per cent to 20 per cent.
The CRR is a monetary tool used to either call up excess liquidity or release funds needed for the growth of the economy as situation demands.
He further said that the public sector CRR will be retained at the current level of 75 per cent and the symmetric corridor of plus or minus 200 basis points around the MPR will be maintained.
“The public sector should be retained at 75 per cent and foreign exchange trading position should also be retained at 1 per cent,’’ Emefiele said.
The CBN governor said the decision to lower the value of naira against the dollar was to strengthen the currency.
