- Foreign Exchange Inflows Surge by 82.5%
The Nigeria’s capital importation increased significantly in the last month of the year, following a surge in global oil prices, according to the Central Bank Governor, Mr. Godwin Emefiele.
The foreign exchange inflows rose 82.45 percent in December 2016 owing mainly to OPEC production cut that saw crude oil prices trading above $50 a barrel.
The governor further stated that the foreign exchange policy of the apex bank was well crafted to aid speedy economic recovery. For instance, the 60 percent of the available foreign exchange allocated to the manufacturing sector had started yielding based on the current manufacturing index released by the National Bureau of Statistics, the governor stated.
Currently, the external reserves stood at $28.9 billion, adding about $2 billion dollars within two weeks, from $27 billion recorded two weeks ago.
On the issue of surging inflation, Emefiele said, “The committee noted that inflationary pressures would begin to subside as non-oil output recovers and the Naira exchange rate stabilises.” This projection is in line with the Investors King analysis that inflation pressures will start to subside in the first quarter of 2017.
However, the governor stated that until then, a rate cut would worsen the current progress and undermine the outlook of foreign exchange market.
“The committee also feels that doing so will further aggravate demand pressures, while undermining the existing income levels in the face of the already expansionary monetary policy and increasing inflationary pressure, which will make the economy unattractive for foreign and domestic investment.”
“Given these limitations, the committee was reluctant to lower the policy rate on this occasion, but remains committed to doing so when the conditions permit.”
This means that the 10 member committee that made up the Monetary Policy, who attended the monetary policy meeting between Monday and Tuesday voted to maintain the current monetary policy rate at 14 percent, while Cash Rate remains 22.5 percent.
