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LequteMan
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The Central Bank of Nigeria has explained further reasons for the Monetary Policy Committee’s devaluation of the naira and raising of key rates, saying the policy decisions were meant to save the economy from a precarious situation of a sliding naira and excess banking sector liquidity. PUNCH reports.
The Deputy Governor, Corporate Services, Mr. Bayo Adelabu, said these when members of the House of Representatives Committee on Banking and Currency visited the CBN office in Lagos on Wednesday.
“The decision of the MPC was the best we could do under the circumstance the economy is presently. We noticed that a lot of things contributed to the pressure on the naira. Firstly is the declining revenue from oil.
“Our source of revenue in this country is just oil and when oil price declined by about 25 per cent in the last one month, we expected that there would be pressure on the foreign reserves. We believe that the pressure on the naira, apart from the declining oil prices, is also as a result of the liquidity in the banking industry whereby a lot of frivolous demands are being made by customers.”
“The only thing to do to stop bank from granting loans to these customers is to mop up more of the monies available to the banks. That was why we increased the CRR on private sector deposits. We believe it will reduce the pressure on the foreign reserves.”
The CBN deputy governor noted that instead of lending to the productive sectors of the economy, banks were busy advancing loans to mainly importers of consumable items.
“What the CBN is saying is that we need to become more patriotic. We should patronise locally-made goods and services. We do not need to be importing everything. This is part of the reasons for the pressure on the naira,” Adelabu said.
#Naira #CBN #Nigeria
The Deputy Governor, Corporate Services, Mr. Bayo Adelabu, said these when members of the House of Representatives Committee on Banking and Currency visited the CBN office in Lagos on Wednesday.
“The decision of the MPC was the best we could do under the circumstance the economy is presently. We noticed that a lot of things contributed to the pressure on the naira. Firstly is the declining revenue from oil.
“Our source of revenue in this country is just oil and when oil price declined by about 25 per cent in the last one month, we expected that there would be pressure on the foreign reserves. We believe that the pressure on the naira, apart from the declining oil prices, is also as a result of the liquidity in the banking industry whereby a lot of frivolous demands are being made by customers.”
“The only thing to do to stop bank from granting loans to these customers is to mop up more of the monies available to the banks. That was why we increased the CRR on private sector deposits. We believe it will reduce the pressure on the foreign reserves.”
The CBN deputy governor noted that instead of lending to the productive sectors of the economy, banks were busy advancing loans to mainly importers of consumable items.
“What the CBN is saying is that we need to become more patriotic. We should patronise locally-made goods and services. We do not need to be importing everything. This is part of the reasons for the pressure on the naira,” Adelabu said.
#Naira #CBN #Nigeria