Sanusi, however, urged Nigerians to show understanding as new monetary policies take time to manifest.
By Kehinde Okeowo
Former governor of the Central Bank of Nigeria (CBN), Muhammad Sanusi, has revealed that the policy of the apex bank under former President, Muhammadu Buhari weakened the naira.
According to him, CBN’s lending to the federal government under the former administration through ways and means, triggered inflationary pressure in Nigeria, resulting in the depreciation of the Naira’s value.
He made the claim on Tuesday while speaking at MTN Capital Markets Day, where he pointed out that the CBN had engaged in aggressive monetary tightening using various liquidity control instruments, including open market operations, Open Buy Back (OBB), and high T-bills rates.
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Sanusi explained that these measures indicated the apex bank’s commitment to its core mandate of maintaining financial system stability and controlling inflation.
“I am optimistic, especially in the short term. We’ve had eight years of rapid expansion of the central bank’s balance sheet through ways and means.
“And that has fueled inflation and weakened the currency. And that is a fact,” he said.
He went on to acknowledge that the central bank can use different instruments to mop up excess money in circulation and added that it needed to do it in a manner that minimizes the cost to both the central bank and the government’s balance sheet.
He further noted that the bank relied a little more on non-conventional instruments.
“If you look at OMO Bills and OBB rates in the last few weeks, I can see that the central bank has started a process of aggressive tightening. OBB rates are beginning to approach what they should be. And I think that’s what the market needs to look at; that the central bank is taking this role of tightening money and fighting inflation as a primary focus,” Sanusi added.
The former Emir of Kano, however, urged the audience to show understanding of the fact that those new monetary policies take time to manifest.
