Home » Latest Politics » CBN to release flexible exchange rate policy today

CBN to release flexible exchange rate policy today

…shifts capital adequacy compliance date for banks

Oyetunji Abioye

The new flexible exchange rate policy will be released today (Wednesday), the Acting Director, Corporate Communications of the Central of Bank of Nigeria, Mr. Isaac Okoroafor, has said.

The CBN’ Monetary Policy Committee had on May 24 risen from its bi-monthly meeting and announced plans to adopt greater flexibility in the management of foreign exchange.

Okoroafor, who told our correspondent on Tuesday that the policy would be unveiled on Wednesday, did not elaborate on the modality.

However, our correspondent gathered that the Governor, CBN, Mr. Godwin Emefiele, would release the blueprint during a news conference scheduled to hold at the apex bank’s headquarters in Abuja by noon.

The delay in the release of the details of the policy has led to further depreciation of the naira at the parallel market. It has also made equities to post record losses in the past few weeks.

Experts and stakeholders believe a flexible exchange rate policy is the right way to go for the country.

The Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, had said it would lead to the reduction in the arrears of remittances, which had accumulated for the past 18 months; reduce uncertainty that investors had been grappling with over the last one year; and boost investor confidence as well as attract greater forex inflows to the economy.

The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, who lauded the proposed exchange rate policy, said the development would eliminate the fears that foreign investors had been nursing about the Nigerian forex policy.

According to him, the decision may make the naira to depreciate initially, but it will find its equilibrum price later.

Addressing journalists at the end of the bi-monthly MPC meeting in Abuja last month, Emefiele had said, “The MPC voted unanimously to adopt greater flexibility in exchange rate policy to restore the automatic adjustment properties of the exchange rate. Consequently, all nine members voted to hold and introduce greater flexibility in managing the foreign exchange rate.”

Meanwhile, the looming economic recession in the country may have forced the CBN to postpone the announcement of a new Capital Adequacy Ratio for Systemically Important Banks scheduled to begin on July 1, it has been learnt.

The CBN had in 2014 ordered the SIBs to boost their minimum CAR to 16 per cent from 15 per cent to increase their resilience to shocks.

The SIBs are First Bank of Nigeria Limited, Guaranty Trust Bank Plc, Zenith Bank Plc, United Bank for Africa Plc, Access Bank Plc, Skye Bank Plc, Ecobank Nigeria and Diamond Bank Plc.

The eight financial institutions designated as the SIBs by the central bank were required to hold more liquid assets and a liquidity ratio of 35 per cent.

This meant the affected banks were expected to have a minimum liquidity ratio, which is five per cent above the 30 per cent requirement in the industry.

The new CAR, which was the fallout of the 2009 banking crisis in the country, was scheduled to start on July 1, 2016.

However, the central bank is planning to postpone the rule because the “sensible” thing to do is “reflate the economy and encourage lending,” the Director of Banking Supervision, CBN, Mrs. Tokunbo Martins, toldBloomberg on Tuesday.

She said an announcement on the new date of implementation would be made by the end of the week.

The Federal Government is planning to avoid a recession or mitigate the impact of a looming one by boosting banking lending to stimulate economic growth.

The capital adequacy ratio of nation’s biggest banks declined to 16.6 per cent at the end of April from 17 per cent a year earlier as economic headwinds increased, Martins said.

If the rules had to be implemented at the beginning of next month, it wouldn’t leave “much headroom for proper lending,” she said.



Related Posts

Website Pin Facebook Twitter Myspace Friendfeed Technorati del.icio.us Digg Google StumbleUpon Premium Responsive

Short URL: https://newnigerianpolitics.com/?p=45860

Posted by on Jun 14 2016. Filed under Latest Politics. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Leave a Reply


Browse National Politics

Featuring Top 5/1349 of National Politics


Read more

Browse Today’s Politics

Featuring Top 5/38 of Today's Politics

Browse NNP Columnists

Featuring Top 10/1559 of NNP Columnists

Browse Africa & World Politics

Featuring Top 5/2378 of Africa & World Politics


Read more






July 2024

© 2024 New Nigerian Politics. All Rights Reserved. Log in - Designed by Gabfire Themes