The CBN in a show of independence, has finally taken the bull by the horn on its monetary policy stance. The 8.4% devaluation of the midpoint official exchange rate has effectively moved the exchange rate band to N159.6 - N176.4. This move follows a series of intervention measures already implemented by the CBN, one of which is the transfer of approximately 50% of forex transactions to the interbank market.
Nigeria's central bank devalued the naira by 8% and raised interest rates sharply yesterday in an attempt to curb fiscal bleeding due to the dropping oil prices. The bank moved the naira's target band to 160-176 to the U.S. dollar, compared with 150-160 naira previously, while it also simultaneously increased interest rates by a substantial 100 bps to 13% - the first interest rate hike in over two years.
The monetary policy committee (MPC) meets today and tomorrow in Abuja. Given market turmoil, the depletion of official reserves (by US$1.5bn month-to-date) and the surge of the US dollar globally, the committee does not have the option of leaving its stance unchanged.
President Goodlcuk Ebele Jonathan will travel to London tomorrow evening to preside over a meeting of Nigeria’s Honorary International Investment Council (HIIC) which opens in the British capital on Friday.
Following a competitive bidding process involving about thirty organizations (including bidders from both within and outside the financial services industry) which commenced from May 2014, Skye Bank Plc (the Bank) was announced as the Preferred Bidder for the acquisition of the Asset Management Corporation of Nigeria (AMCON) 100% shareholding in Mainstreet Bank Limited (�MBL�), on Saturday, October 4, 2014.
The buzz on Customs Street now is about the conundrum Skye Bank Plc’s successful bid represents. Investigations now debunk some long-held assumptions about what a successful bid represents and how PLC’s seeking to make such regulated entities should conduct business. Much more importantly are the unanswered questions from a governance and regulatory standpoint.
Our take on the latest personal statements of members of the monetary policy committee (MPC) is that their position has hardened. There is not one suggestion that easing is an option, and the focus has moved to when (not whether) to tighten.