Managing Exchange Rate, Interest Rate, Capital Flows and Reserves

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Friday, May 13, 2016 9:49 PM / Book Abstract 

Here is an abstract for the Dr. Temitope Oshikoya’s latest book on central banking titled “THE ART OF CENTRAL BANKING IN NIGERIA”.

The Central Bank of Nigeria (CBN) has been under tremendous pressures in managing monetary and exchange rate policies due to the prevailing economic circumstances since 2014. In the face of global oil price collapse from its highest point in July 2014 and dwindling capital inflows, Nigeria has witnessed sharp deceleration of economic growth, rising inflation and unemployment, widening gap between the parallel and official exchange rates, falling external reserves.  

This book is a compendium of essays providing a balanced and pragmatic perspective to the issues of central banking, monetary policy, managing exchange rates, interest rates, capital flows and external reserves in Africa’s largest economy. 

Part I of the book evaluates the performance of the CBN at achieving its economic objectives in light of the economic, political and institutional constraints. It situates the functions of the CBN within a general framework for the best practices of central banks. Three departures are highlighted: the absence of a welfare function in the 2007 CBN Act, the composition of the MPC and CBN leadership, and the growing threats to its independence. These three factors explain the erratic monetary policy decisions of the CBN.

Part II looks at the structural and contemporary issues faced by the CBN. The principal theme presented here is the monetary policy trilemma – the inability of central banks to achieve exchange rate flexibility, monetary policy independence and capital mobility all at once. The book discusses the CBN’s exchange rate management policies in the last 24 months and consider the domestic and international responses to these policies.                          

Part III shifts attention to two financial variables: foreign reserves and capital flows. The response of international markets to Nigeria’s exchange rate management has been generally negative, an issue that is addressed. The book assesses the rationale and impact of Nigeria’s eviction from the JP Morgan Emerging Markets Bond Index, while scrutinizing the impact of exchange rate policy on capital flows in the country, exposing the suggestion that the experienced capital outflows are driven mainly by policy decisions as opposed to global and structural factors and economic incentives.                         

The book maps out the policy options available in navigating the monetary policy trilemma and potential economic shocks in the future.  

These policy options are situated within the social, political and economic contexts of Nigeria. As opposed to a single policy instrument as a panacea or silver bullet, a comprehensive policy package is proposed as the best policy option.

The book draws on monetary economics, and the author’s practical and professional banking experience, and high level policy exposure of working with Governors of central banks and Ministers of Finance in West Africa.  

The Book, THE ART OF CENTRAL BANKING IN NIGERIA: Managing Exchange Rate, Interest Rate, Capital Flows and Reserves  can be purchased HERE  

Related Books by Dr. Temitope W Oshikoya  

Pathways to Shared Prosperity in Nigeria: Making Market and Government Work in a Global Context - May 08, 2016


The Art of Central Banking in Nigeria: Managing Exchange Rate, Interest Rate, Capital Flows and Reserves  Apr 27, 2016




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