Wait for new Governor CBN may affect Monetary Policy



Proshare NI
June 01, 2009 at 16:01 GMT
The wait for a new Governor of Central Bank of Nigeria (CBN) may affect the country’s Monetary Policy. An Industry watcher (name withheld) made this affirmation to Proshare NI today in Lagos Nigeria.
Our Source affirmed that since people are yet to be sure of who the next Governor of CBN will be, therefore they would hold tight to their money and would not want to let go.
The Industry Analyst also confirmed that Foreign Exchange (FOREX) inflow into the country would reduced because investors are not sure of what to expect next; not knowing the interest of the new Governor of the Apex Bank.
In the same vein, the Source asserts that anything done in respect of any of the CBN’s policies is null and void; because under law, the Senate is must approve whoever that has been appointed as the new Governor of Central Bank.
“Anything that is done in respect of CBN policy now is illegal, null and void and therefore can be challenged in Court” the Source said.
Proshare NI gathered that even for an acting Governor of the CBN; the law stipulates that such appointment must be approved by the Senate otherwise all policies taken remain illegal and can be challenged in a Law Court.
The reason for this is that whatever decision taken; either by a substantive or acting Governor of the Apex Bank would have an impact on the Nigerian Economy.
As earlier reported, in February 2009, CBN came up with measures after the Naira fell more than 20 percent (20%) compared to the United States Dollar (US $) in two months as Nigeria a major oil exporter battled with lower foreign earnings precipitated by a weaker oil price and the global economic meltdown.
However, in late May 2009, Professor Chukwuma Soludo whose tenure has just expired as Governor of CBN affirmed that the Apex Bank’s Monetary Policy Committee (MPC) had a meeting and has confirmed that CBN would return to a fully liberalised Foreign Exchange Market over the next three months, which would allow Nigerian Banks to freely trade among themselves after some period of restrictions.
This is coming on the heels of Reports that Foreign Banks have halted credits as they await a new Governor of CBN.
The Report affirmed that Nigerian banks are finding it difficult to get new credit lines as existing ones are neither extended by their foreign partners; due to new economic directions of the Federal Government (FG) in the wake of the appointment of a new Governor of the CBN.
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