Adenikinju Festus, one of the members of the Monetary Policy Committee of the Central Bank of Nigeria (CBN) moved for the increase of MPR, while asking the apex bank to probe the foreign exchange market operations in Nigeria.
Festus stated that the high level of inflation and interest rates margin is unacceptably wide, but he voted for the monetary policy rate to be increased in the last MPC meeting held between September 16 to 17, 2021.
In a statement released on Wednesday by the CBN, while nine members of the MPC voted to retain the MPR at 11.5 percent, Festus preferred the rate moved to 14.5 percent.
The increase in MPR affects the cost of repayment of loan banks approves for customers, as it is the interest rate used by the CBN to lend to the commercial lenders.
Following the votes of the ten MPC members, the MPR was retained at 11.5 percent.
Festus noted some concerns
Festus admitted Nigeria is struggling to expand its foreign exchange supply amid volatile oil export, and it is faced with the challenge of how to improve it.
According to his statement, the four major sources: oil exports, foreign capital flows, remittances and non-oil exports, foreign portfolio investments are very fungible, despite being desirable.
He suggested the country to focus on remittances and non-traditional exports out of the four major sources in order to expand supply for longterm.
Festus also called on the CBN to conduct a survey on Nigeria’s foreign exchange market operations in order to understand the microeconomic factors driving economic agents’ behaviour in the market and improve the foreign exchange supply.
“In the light of the above, I would like to make the following recommendations: First, given the limited options open to the Bank to expand foreign exchange supply in the near term, there is a need to carry out a comprehensive study of foreign exchange market operations in Nigeria with a view to determining the fundamental drivers, and relative sizes of the segments of the foreign exchange market in Nigeria.” Festus said in her statement.
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