CBN Raises Interest Rate To 24.75%
- Says security agencies probing FX infractions
- Insists no hiding place for Binance
BY COBHAM NSA – In line with its resolve to continue tightening the monetary policy cycle as part of efforts to strengthen the nation’s economy, the Central Bank of Nigeria (CBN) has again raised the Monetary Policy Rate (MPR) by 200 basis points from 22.75 per cent to 24.75 percent.
This is as the apex Bank also announced an adjustment of the asymmetric corridor of +100/-300 basis points.
The CBN Governor, Mr Olayemi Cardoso, disclosed this on Tuesday at the end of the 294th Monetary Policy Committee (MPC) meeting in Abuja, saying the MPC also decided to retain Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 45 percent.
Furthermore, he said while the CRR for Merchant Banks was moved from 10 to 14 percent, the Liquidity Ratio was left untouched at 30 percent.
The CBN Governor said faced with either continuing the tightening cycle or a hold to see further impact of last month’s rate hike, the MPC members, after reviewing the balance of risks, decided that a further tightening was the best way to go for now.
MPR is a short-term, often overnight rate that banks charge one another to borrow funds and this was the second MPC meeting in year 2024.
CBN Doesn’t Control Cryptocurrency
Speaking on the allegations of illegal financial transactions against Binance, Cardoso said CBN is collaborating with security and other relevant government agencies to handle the case.
According to him; “Let me clarify that the CBN collaborates with other government agencies. A month ago, we had collaboration with EFCC, security agencies, ONSA, SEC and we have been sharing information together.
“The responsibility for regulating crypto currency is not our own. It is strictly that of SEC”.
No Outstanding Valid FX Claims
Also reacting to insinuations in some circles, the CBN Governor maintained that all valid Forex transactions backlogs have been cleared, adding that security agencies currently were investigating infractions discovered by the audit firm.
Hear him; “We got a reputable audit firm to look into the documents and they did a thorough job and came out to say that a number of these transactions did not qualify.
“I have said this before. Some cases you have allocations of millions of dollars which were never requested. You also had cases where there were requests but no Naira backing, yet were allocated foreign exchange. And the list goes on.
“Those were some of the infractions. It was for those reasons that we refused to validate those transactions.
“Apart from the fact that documentation was not satisfactory, in many cases, there were outright illegal. The law enforcement agencies are now looking at those transactions that as far as we are concerned, were not valid to be paid.
“I would emphasise that if there is any information to the contrary, we would in due course consider that. But as at today, that is exactly where we stand. The law enforcement agencies are taking a very hard look into those transactions.”
Further amplifying the apex Bank’s position, Cardoso said; “I have said it before and I will say it again, that the valid transactions, as far as, the CBN is concerned, have been taken care of. We are also not unmindful that, just may be, some stakeholders may have some backlog over a period of time or the other.
“We are not unmindful of that. Some may go back years over a period of time. We have done what we can to make the market open, transparent and liquid as much as possible. So those particular stakeholders are free to access the market.
On Dairy Products Import
Also explained that the decision to allow those interested in the importation of dairy products into the country to access the FX market was to ensure a level playing field in the sector.
He said; “We have decided to make the market as transparent as possible. Because it is this lack of transparency that drives people away from the market. Where the market players feel that there is something that isn’t quite right, that there is distortion, there is tendency for them to pull back.
“We observed that in this particular case, only six companies were allowed to bring in dairy products and its derivatives. Only six.
“We believe we should not constraint anybody that wants to come to the FX market to purchase FX from doing so. We should leave the market open and transparent. Certainly we cannot restrict that market to just six players”.
Meanwhile, Cardoso said the apex Bank would not renege on its decision to avoid direct involvement in reactor interventions to insulate itself from the abuses that haunted the recent past administration.
