Naira scarcity may last additional two weeks to normalise
By Jeph Ajobaju, Chief Copy Editor
Naira supply through the banking system “will take one or two weeks to normalise,” a top official of the Central Bank of Nigeria (CBN) has disclosed.
He explained this will not fuel the protest planned by the Nigeria Labour Congress (NLC) because “the CBN is not out to confront labour but the process and requirements for releasing cash back into the system is not that simple.”
The official, who did not want his name mentioned, insisted the CBN will not reverse its cashless policy and “will regulate the volume of cash in circulation in relation to the amount of cash the banks have in their vaults.”
He said the CBN does not want to repeat what happened before the naira redesign policy was introduced during which more than N3.3 trillion was outside the control or knowledge of the banking system.
By regulating how much is held outside bank vaults, he stressed, the CBN “will record greater success in implementing its monetary policy decisions.”
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Tackling inflation
One of the reasons the CBN gave for the naira redesign is to tackle inflation, its cardinal objective.
The official pointed to the response of CBN Governor Godwin Emefiele to growing inflation and the hike in interest rate to 18 per cent after the last Monetary Policy Committee (MPC) meeting, per The Nation.
Emefiele explained the CBN will do “whatever needs to be done to rein in inflation, that will continue to be the strategy, “but we will do it more moderately going forward.
“We are conscious of the fact that when you over tighten it will begin to have contagion effects and negative impact on banking system and financial soundness and financial system stability in an economy.
“That is what we want to do. We want to reduce inflation and not do it in the way it will upset the economy.”
Banks opened to customers over the weekend but they continue to ration the amount of cash (old notes) paid over the counter and through Automated Teller Machines (ATMs).
“The CBN has significantly increased the amount of cash it allocates to bank branches since the cash crunch began,” a bank official said.
But, he added, “while the CBN has really tried to increase the quantity of cash in supply, it is still not enough to meet the demands like we used to have before the naira swap programme.”