The use of dollar in domestic transactions and poor economic growth outlook now combine to give the Central Bank of Nigeria (CBN) sleepless nights.
CBN Governor, Godwin Emefiele, disclosed at the end of the Monetary Policy Committee (MPC) meeting in Abuja that the weakness of the naira fuels the illegal use of dollar in day-to-day domestic transactions.
He said the payment of rent, school fees, and other major expenses in dollar is illegal and warned that “the CBN will very soon in due course come after” those who engage in such activities.
He also expressed concern over economic growth outlook, but said “I’m optimistic that after the elections, confidence will improve, businesses will resume. I’m confident the economy will be resilient.”
In line with expectation of financial analysts, the CBN left its benchmark interest rate unchanged at 13 per cent hoping that tighter monetary policy should offset the effects of inflationary pressure aggravated by elevated spending ahead of the election after double devaluation of the naira.
Emefiele said the MPC was satisfied with efforts to stabilise the naira that has been under serious pressure in the past six months following oil price slump.
Inflationary pressure has intensified since the naira dropped from N165 to the dollar less than a year ago to N198 last week, about N206 in the interbank market last month and weaker than N220 in the black market.