Investing.com - Financial Markets Worldwide

UPDATE 1-Nigeria's central bank will keep controversial FX system

Published 24/06/2019, 11:11
UPDATE 1-Nigeria's central bank will keep controversial FX system

(Adds details, context)
By Chijioke Ohuocha
ABUJA, June 24 (Reuters) - Nigeria's central bank will keep
its foreign exchange system, its governor said on Monday,
supporting a controversial managed float of the naira that
investors and the International Monetary Fund have asked the
country to dismantle.
Despite years of inflationary pressure as global prices for
oil, Nigeria's main export, dropped, the government and central
bank have spent billions of dollars propping up the naira's
value in the face of calls for a free float. Central bank governor Godwin Emefiele announced his intent
to keep the foreign exchange system at a briefing in Abuja where
he laid out policy direction for the next five years.
"We would continue to operate a managed float exchange
rate," he said.
The naira officially trades at about 306 per U.S. dollar.
But it is sold on the black market at roughly 360 to the dollar,
a disparity that has frustrated importers and other investors as
well as the IMF.
Last month, Emefiele became the first central bank governor
to get a second term, after newly re-elected President Muhammadu
Buhari nominated him, a sign of policy continuity.
Emefiele also announced a plan to recapitalise Nigeria's
banks.
"Over the next five years banks would be required to hold
higher capital," he said, adding that foreign exchange
depreciation had weakened the industry's capitalisation.
The bank will discuss the plan at a committee of governors,
Emefiele said, though he did not say when this would be.
The governor added that Nigeria's pace of economic growth
remains fragile, but the central bank would strive to decrease
the inflation rate to single digits and maintain a positive
interest rate.


Latest comments

Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.